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:
Dubai Financial Market Performance YTD … WOW!
- Published on Tuesday, 05 February 2013 15:18
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|Market||YTD Return %|
|Bahrain All Share||1.9%|
|Egypt – EGX30||5.2%|
* Traded from Monday to Friday. Returns as of market close on Feb. 4, 2013. Source: Global Investment House
It’s important to note, however, that markets in the Gulf lack the liquidity of larger emerging markets, with the exception of Kuwait and Saudi Arabia. As such, money flowing in or out can result in huge sings up or down. For now, investors and market watchers in the region are optimistic that the high-flying performance will the the theme for 2013.
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.”