Dubai

[kennynah]

we shd investigate which banks heavily loaned to Dubai...

[LenaHuat]

Which bank does not have some Islamic bonds in their portfolios? I think most global banks would have.
These same banks could also own Dubai real estate either directly or indirectly.
That means Dubai sits on both sides of their balance sheets.

[winston]

we shd investigate which banks heavily loaned to Dubai...

Please see the HSBC and Standard Chartered threads on their exposure. Both were hit about 7% today in HK.

Banks play down Dubai exposure, markets still wary

French banks said their exposure to the Dubai crisis was limited and Italy's central bank said Italian banks should face no problems linked to the Gulf trade and tourism hub. Those sentiments were echoed by Chinese banks.

Abu Dhabi Commercial Bank has at least 8-9 billion dirhams ($2.18-$2.45 billion) exposure to Dubai World and related entities, forcing the bank to book more provisions, a senior executive of the bank said. First Gulf Bank has at least 5 billion dirhams ($1.36 billion).

http://www.reuters.com/article/business ... dChannel=0

[LenaHuat]

I have just read that RBS was both lender and book runner for some syndicated loans. Underwriting could be off balance sheet item.
Many expatriates borrowed to buy properties in Dubai. These collaterals would easily 'rot' under the fierce sun if vacancy leads to poor maintenance.

[LenaHuat]

According to BOA-Merrill Lynch, UAE has total debts of US$184 billion.
http://www.reuters.com/article/ousivMolt/idUSTRE5AQ28C20091127

[winston]

RBS Led Dubai World Lenders, HSBC May Have Most at Stake in UAE Share Business
By Vivian Salama and Gavin Finch

Nov. 27 (Bloomberg) -- [b]Royal Bank of Scotland Group Plc underwrote more loans than any institution to Dubai World, the state company seeking to reschedule debt, while HSBC Holdings Plc has the most at risk in the United Arab Emirates, according to JPMorgan Chase & Co.

RBS, the largest U.K. government-controlled bank, arranged $2.3 billion, or 17 percent, of Dubai World loans since January 2007, JPMorgan said in a report today, citing Dealogic data.

HSBC, Europe’s biggest bank, has the “largest absolute exposure” in the U.A.E. with $17 billion of loans in 2008, JPMorgan said, citing the Emirates Banks Association. Abu Dhabi Commercial Bank PJSC may be owed $1.9 billion by Dubai World, making it the largest creditor outside the emirate, said two people familiar with the companies.

“The market is very nervous about exposure to Dubai and RBS’s name has been associated with it as both a lender and a book runner,” said David Williams, a banks analyst at Fox-Pitt Kelton Ltd. in London.

RBS spokesman Piers Townsend in London declined to comment.

“HSBC has more in customer deposits in the United Arab Emirates than it has in loans and advances,” said Jezz Farr, an HSBC spokesman in London. Loans and advances to customers in the U.A.E. totaled $15.9 billion at the end of the first half of 2009, while deposits stood at $19.3 billion, Farr said, declining to comment further.

“Our aggregate exposure is not significant and we see no need to change our full year impairment guidance for 2009,” said a Barclays’ spokesman. Credit Suisse’s “exposure is immaterial,” said spokesman Marc Dosch.

Dubai World borrowed $13.5 billion in syndicated loans in 2007, according to JPMorgan’s report. Banks “typically retain 10 percent to 20 percent of the originated loans and use collateral or hedges,” JPMorgan wrote.

Sumitomo Mitsui Financial Group Inc., Japan’s second- largest bank by market value, may be owed at least $225 million by Dubai World, according to people familiar with the matter. The lender said in a statement it has “exposure” to Dubai World, without giving details. The company said it hasn’t changed its financial forecasts. Smaller rival Mizuho Financial Group Inc. may be owed about $100 million, the people said.

http://www.bloomberg.com/apps/news?pid= ... sdA7viNEtE

[kennynah]

Bank Loans to UAE In dollars (blns of UAE dirhams) (current FX, blns)
HSBC 62.56 $17.03
Standard Chartered (STAN.L) 28.54 $7.77
Barclays (BARC.L) 13.14 $3.58
ABN AMRO* (RBS.L) 8.23 $2.24
Arab Bank ARBK.AM 7.66 $2.09
Citigroup (C.N) 7.06 $1.92
Bank of Baroda (BOB.BO) 6.54 $1.78
Bank Saderat Iran 6.38 $1.74
BNP Paribas (BNPP.PA) 6.20 $1.69
Lloyds (LLOY.L) 5.77 $1.57

[winston]

So what are the lessons from this Dubai episode ?

1) Do you have a proper Business Plan ?
2) Are there various scenarios in your Business Plan ? From pessimistic to optimistic ?
3) Leverage is a double edged sword
4) How's your Risk Management ?
5) How's your Common Sense ?
6) Be careful when lending money, even to brand names
7) Dont count your chicken until they have hatched
8) If you have bought one of those houses on The Palms. did you first calculate how much you could lose rather than how much you could be making ?

[millionairemind]

Hang on tight, big brother's coming


Abu Dhabi to ‘Pick and Choose’ Dubai Debt Support, Reuters Says

By Ayesha Daya

Nov. 28 (Bloomberg) -- Abu Dhabi, Dubai’s oil-rich neighbor, will “pick and choose” which of Dubai’s assets to underwrite, Reuters reported, citing an unidentified Abu Dhabi official.

Abu Dhabi won’t fund all of Dubai’s debt, the official said, according to Reuters.

Markets around the world have been roiled since Dubai World, with $59 billion of liabilities, said Nov. 25 it was seeking to delay debt payments.

[LenaHuat]

Will Big Brother Abu Dhabi pick LSE (London Stock Ex), MGM Mirage Las Vegas, Barney (NY), the world's tallest building@Dubai?? IMHO, Dubai is a write-off. It was built by foreigners and on foreign loans. Why would it qualify as a financial centre?