Bloomberg News

U.A.E. Banking System to ‘Face New Headwinds,’ Fitch Says

December 06, 2011

Dec. 6 (Bloomberg) -- The United Arab Emirates’ banking system will come under pressure as the global economic crisis and Abu Dhabi’s slowdown undermine asset quality and restrict liquidity, Fitch Ratings said.

Banks in the country will “face new headwinds” brought on by the “fragile” real-estate industry and problems at Dubai government-linked entities and U.A.E. companies, the ratings company said in a report today.

“The U.A.E. operating environment is not immune from global issues and this threatens the recovery in the banking system,” the report said, “Fitch is particularly expecting several key economic sectors such as trade, tourism and services to be negatively impacted.”

Fitch said it expects banks’ earnings to decline because of low business volumes and new central bank rules on retail lending. The main challenge is the banks’ ability to raise long- term funding, which has become “more costly, especially for Dubai-based banks” as liquidity in global markets declines, it said.

--Editors: Steve Bailey, Jon Menon

To contact the reporters on this story: Tamara Walid in Abu Dhabi at twalid@bloomberg.net; Stefania Bianchi in Dubai at sbianchi10@bloomberg.net

To contact the editors responsible for this story: Chad Thomas at cthomas16@bloomberg.net; Edward Evans at eevans3@bloomberg.net


Race, Class, and the Future of Ferguson
LIMITED-TIME OFFER SUBSCRIBE NOW

(enter your email)
(enter up to 5 email addresses, separated by commas)

Max 250 characters

 
blog comments powered by Disqus