Banks in the UAE are unlikely to take loan-loss provisions in the second quarter on troubled Saudi groups Saad and Al Ghosaibi as they await directives from the central bank, bankers told Reuters.
The UAE central bank is expected to review exposure reports submitted by banks and advise them on how to provision against potential losses, they said.
Second quarter results of banks in the UAE are due to be announced from mid-July.
"It is too early for provisions as we are almost finalising our second quarter financials," said the chief financial officer of an Abu Dhabi-based bank that has exposure to the troubled companies.
"The central bank should tell us how much provisions we should take and whether the Saudi conglomerates are capable of restructuring their debts," he said, asking not to be named because his bank has banned officials from speaking about the issue.
At least four Abu Dhabi-based banks, National Bank of Abu Dhabi, Abu Dhabi Commercial Bank, First Gulf Bank and Union National Bank have exposures to the Saudi groups, according to banking sources or statements from the banks themselves.
"Yes, banks with exposure have informed the central bank but I don't think banks will be required to take provisions in Q2. We are expecting central bank guidelines later this month," another senior banker in Abu Dhabi said.
"The loans to the Saad group have different maturities, some are secured by deposits with us, but it has to be worked out and it will take two to three months," he said on condition of anonymity.
Central Bank officials declined to comment. (Reuters)For all the latest banking and finance news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
Subscribe to Arabian Business' newsletter to receive the latest breaking news and business stories in Dubai,the UAE and the GCC straight to your inbox.