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Dubai World Could Cause Banking Instability in Q2


Middle East : 26 April 2010

It is likely that all UAE Banks will take the brunt of the Dubai World restructuring deal in the second quarter of this year. While Banks have recently released their figures for the first quarter none of them have yet accounted for the effect the Dubai World restructuring deal is going to have on the sector.

On April the 22nd the Central Bank advised the regions banks not to make any provision for Dubai Worlds debts at the present time and to calculate their figures for the first quarter without taking this impact into account until the Central Bank advised them further on the matter.

Analysts estimate that Bankers in the UAE could be codependent on the Dubai Worlds debt to the tune of $15 billion. At present Dubai World are holding Creditor discussions with over one hundred parties. The initial Dubai World proposal offered creditors 1% on their debts this offer was subsequently refused and until such time as a new deal is accepted Banks cannot fully calculate the implications it will have on their balance sheets.

It was reported that talks between Dubai World and Creditors are progressing well at present but it may still be sometime before all matters are finalized to the satisfaction of all parties involved.

Paul Holdsworth, Staff Writer, Gulf Jobs Market News
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