UAE government moves to decriminalize bounced checks, HSBC cries foul
- Published on Monday, 11 February 2013 17:12
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A new move to decriminalise bounced security cheques could backfire without a federal credit bureau in place, a top banker has warned.
It comes as other banks point to a rise in Emiratis missing payments on unsecured lending, which includes credit cards and personal loans, ever since a presidential decree immunised Emirati borrowers from going to jail over bounced security cheques.
If they are barred from using cheques as a security measure, banks may become unwilling to lend to individuals, said Rick Crossman, the head of retail banking and wealth management at HSBC Middle East.
UAE bank begins offering accounts in Yuan
- Published on Thursday, 07 February 2013 14:34
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The step will also help individual investors and small businesses to hedge against the risk of the yuan’s appreciation against the US dollar.
“The enormous increase in UAE’s bilateral trade with China and the resultant fast-growing Chinese-related business and resident population in the country have turned the focus significantly on the world’s second-largest economy,” said Suvo Sarkar, the general manager of retail banking at Emirates NBD.
Emirates NBD’s move is a reflection of the tightening in commercial ties between the UAE and China in recent years.
Two-way trade has advanced fivefold over the past decade from US$3.12 billion (Dh11.46bn) in 2002 to $15.6bn last year, according to data from the Ministry of Foreign Trade.
Banks operating in Dubai including HSBC, Standard Chartered and Mashreq, have begun offering business banking services denominated in Yuan. Emirates NBD, Union National Bank and National Bank of Abu Dhabi have opened offices on the Chinese mainland.
Last March, Emirates NBD became the first bank in the Middle East to issue a bond sale denominated in Yuan.
The bank’s plans also link into a wider bid by Dubai to become an offshore trading centre for the currency.
Saudi Arabia and the UAE handle bad debts differently, yet both come to the same wrong conclusion
- Published on Wednesday, 06 February 2013 17:23
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With interest rates so low (a typical savings account pays 0.5% per year), consumer loans are still on the high end in the Gulf. A low annual interest rate on credit cards in the region is 24%, regardless of your credit history with the bank. Some banks, such as Citibank offer credit cards with annual interest rates as high as 36% (is this legal in any other part of the world?). Auto loans are on the cheaper side ranging from 4%-9% or above depending on the bank. Interest rates on personal unsecured loans range from 6% to well above 10% depending on the borrower’s income. It’s no wonder then that consumer loan defaults have been rising.
Both Saudi Arabia and the United Arab Emirates (UAE) have seen rising bad debts on bank balance sheets over the past few years. Though their approach to handling these bad loans were different, they both arrived at the same wrong conclusion. First, here’s a report from Arab News on Saudi Arabia:
Gulf banks go shopping in the MENA region
- Published on Monday, 04 February 2013 12:37
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UAE Central Bank holds off on tougher regulations stating banks are in a good position
- Published on Saturday, 26 January 2013 05:15
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“The UAE Central Bank has postponed new regulations that limit commercial bank lending to governments and their related entities for further review in a move that is expected to give lenders sufficient time to come to grips the requirements.
The regulator also has put off the implementation of another rule on banks’ liquidity ratios. The rules, originally scheduled to come into effect on January 1, had been designed to help banks withstand market disruptions and avoid a concentration of debt payments.”