Banks' exposure to Dubai World 'estimated at $15bn'
Dubai, February 23, 2010
Banks in the UAE have about $15 billion of exposure to Dubai World, according to a Moody's Investor Service report.
The report, quoted by Financial Times, said 12 rated UAE banks and the regional entity of HSBC could probably absorb losses of 40 per cent.
Moody's said: “UAE banks would incur losses amounting to only around 9 percent of their capitalisation as of year end 2009. This would hurt 2010 profits, but not jeopardize solvency.”
John Tofarides, Moody's analyst, said Dubai-based banks were particularly exposed to Dubai state-linked and private companies, some of which might come under stress, potentially triggering "serious repercussions".
The rating agency also said a potential "haircut" could affect the banks' ability to tap debt markets in the future.