Monday, November 24, 2008

Bailout-the word that dare not speak its name in Dubai


By Amran Abocar
DUBAI, Nov 24 (Reuters) - Imagine a merger between two struggling lenders is suddenly brought under government supervision and folded into one federal bank before the group is bundled into another federal entity and given a cash injection.
Imagine all of that happening in the space of 24 hours.
Such moves may be common fare during a global financial crisis, but in Dubai, the government's actions are not called a bailout or even a rescue but "a milestone development" for the country's financial sector and analysts are loathe to use such loaded terms publicly.
"I think this is a bailout. This is a government takeover," said one UAE analyst who declined to give his name, citing the sensitivity of the issue -- another sign of just how politically charged words become in a region where corporate governance is in its infancy.
Transparency can be hard to come by in this glitzy tourism and trade hub which has transformed itself from a sleepy pearl and fishing village into a financial powerhouse in the Gulf Arab region.
Famous for manmade islands in the shape of palm trees and the world map, an indoor ski slope in the desert and a reputation as a shopping haven, Dubai's wings have been clipped recently by the credit crisis.
The city has seen a downturn in its five-year property boom. Banks are restricting lending and job cuts are on the rise.
The transparency issues can make it hard for investors to make bets on markets.
The chief executive of Tamweel TAML.DU, one of the merged lenders whose shares have been suspended, was uncertain about what would happen to the stock.
"It's too early to say, I can't tell you," Wasim Saifi told Reuters on Monday.
And on Sunday the finance ministry said it would take control of a planned merger between mortgage lenders Amlak AMLK.DU and Tamweel and bring them under its Real Estate Bank. The move was aimed at giving the struggling Islamic lenders access to deposits to help finance their obligations.
However, Real Estate Bank, whose website says it takes deposits, is not a licensed bank according to the UAE central bank's website.
Hours later, the government said it would take all three entities and merge them with little-known Emirates Industrial Bank to create Emirates Development Bank.
The director-general of Dubai's Department of Finance said on Monday a new day had dawned in terms of more government and business clarity.
"Today we are facing new realities and we have to be more transparent," said Nasser al-Shaikh, who is also the chairman of Amlak. Continued...

1 comment:

Pentilium5 said...

Ada dengar bank kat kat sana bagi M'sian restaurant financing up to RM500,000 equivalent without having to provide collatera.... sungguh gung-ho tu....