Mall of the Emirates owner Majid Al Futtaim Holding has recently taken its first step into the Islamic bond market. Jaime Puebla / The National
Mall of the Emirates owner Majid Al Futtaim Holding has recently taken its first step into the Islamic bond market. Jaime Puebla / The National
Mall of the Emirates owner Majid Al Futtaim Holding has recently taken its first step into the Islamic bond market. Jaime Puebla / The National
Mall of the Emirates owner Majid Al Futtaim Holding has recently taken its first step into the Islamic bond market. Jaime Puebla / The National

Shadow of credit crunch lingers


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The dust may be settling after Dubai's debt bust-up of the past few years but banks, regulators and ratings agencies are taking few chances as the Arabian Gulf starts to load up again on cheap credit.

With the UAE's bill for bad debts from the last crisis currently sitting at Dh61.7 billion (US$16.79bn) and rising, according to Central Bank data, the financial industry is beefing up its early-warning systems to prevent a repeat of the costs forced on the local economy following Dubai World's $25bn restructuring.

The ratings agency Standard & Poor's has increased staff in Dubai while financial services headhunters report a growing need for highly trained credit analysts.

A $26.1bn bonanza of bonds and sukuk sales in the Gulf has increased the demand for credit ratings as companies such as Majid Al Futtaim Holding take their first steps into Islamic bond markets.

"We're deploying people out of Europe with a lot of analysts coming out of Paris, London and Frankfurt," said Stuart Anderson, S&P's regional managing director. The ratings agency found itself "wanting and needing to have analysts on the ground to be more relevant and to have a deeper regional understanding", he added.

S&P has increased its staff numbers in its Dubai office from three in 2007 to about two dozen this year, most of whom are ratings specialists.

But ratings agencies are also increasingly warning that reported levels of bad debts still sloshing around in the financial system do not reflect financial reality - and that trouble could be looming.

Both S&P and Moody's Investors Service, a rival ratings agency, have warned renegotiated problem loans could re-emerge as a result of global economic turbulence.

The Central Bank has undertaken two major regulatory drives in the past three months in an effort to protect UAE banks from financial shocks.

The first capped the amount of money individual companies could borrow to 100 per cent of the lending bank's capital base - intended to shield lenders from vulnerability to bad debts from the big, government-related companies such as Dubai World.

This month, the Central Bank also announced new guidelines on bank liquidity, intended to put the UAE's lenders on track for compliance with the Basel III regulations.

The Central Bank's data shows the UAE's lenders remain well capitalised by international standards. But high levels of cash in reserve have not yet filtered through to the wider economy with sector-wide net loans and advances growing just 0.3 per cent to Dh1.074 trillion between January and May, the bank's most recent data says.

But banks risk letting good business slip away if they fear lending too much after a painful downturn, said Patrick Mulvey, a former Citibank banker who is training analysts on behalf of the recruitment agency GCC Partners.

The Dubai firm says it is encountering increased demand for corporate bankers with a strong understanding of credit risk.

Bankers also need reassuring that the impact of previous busts should not deter them from lending again, Mr Mulvey said. "The belief that you can never do business after you get hurt is pretty poor," he said.

"That's a pretty sad state of affairs."

Banks would do much better to strengthen their credit guidelines, dust themselves off and carry on lending, he said.

Profile of MoneyFellows

Founder: Ahmed Wadi

Launched: 2016

Employees: 76

Financing stage: Series A ($4 million)

Investors: Partech, Sawari Ventures, 500 Startups, Dubai Angel Investors, Phoenician Fund

SPECS
%3Cp%3E%3Cstrong%3EEngine%3C%2Fstrong%3E%3A%202-litre%20direct%20injection%20turbo%20%0D%3Cbr%3E%3Cstrong%3ETransmission%3C%2Fstrong%3E%3A%207-speed%20automatic%20%0D%3Cbr%3E%3Cstrong%3EPower%3C%2Fstrong%3E%3A%20261hp%20%0D%3Cbr%3E%3Cstrong%3ETorque%3C%2Fstrong%3E%3A%20400Nm%20%0D%3Cbr%3E%3Cstrong%3EPrice%3C%2Fstrong%3E%3A%20From%20Dh134%2C999%26nbsp%3B%3C%2Fp%3E%0A
Key facilities
  • Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
  • Premier League-standard football pitch
  • 400m Olympic running track
  • NBA-spec basketball court with auditorium
  • 600-seat auditorium
  • Spaces for historical and cultural exploration
  • An elevated football field that doubles as a helipad
  • Specialist robotics and science laboratories
  • AR and VR-enabled learning centres
  • Disruption Lab and Research Centre for developing entrepreneurial skills
if you go

The flights

Air Astana flies direct from Dubai to Almaty from Dh2,440 per person return, and to Astana (via Almaty) from Dh2,930 return, both including taxes. 

The hotels

Rooms at the Ritz-Carlton Almaty cost from Dh1,944 per night including taxes; and in Astana the new Ritz-Carlton Astana (www.marriott) costs from Dh1,325; alternatively, the new St Regis Astana costs from Dh1,458 per night including taxes. 

When to visit

March-May and September-November

Visas

Citizens of many countries, including the UAE do not need a visa to enter Kazakhstan for up to 30 days. Contact the nearest Kazakhstan embassy or consulate.

The Gentlemen

Director: Guy Ritchie

Stars: Colin Farrell, Hugh Grant 

Three out of five stars

TALE OF THE TAPE

Manny Pacquiao
Record: 59-6-2 (38 KOs)
Age: 38
Weight: 146lbs
Height: 166cm
Reach: 170cm

Jeff Horn
Record: 16-0-1 (11 KOs)
Age: 29
Weight: 146.2lbs
Height: 175cm
Reach: 173cm

UAE currency: the story behind the money in your pockets
MOUNTAINHEAD REVIEW

Starring: Ramy Youssef, Steve Carell, Jason Schwartzman

Director: Jesse Armstrong

Rating: 3.5/5

Russia's Muslim Heartlands

Dominic Rubin, Oxford

The Birkin bag is made by Hermès. 
It is named after actress and singer Jane Birkin
Noone from Hermès will go on record to say how much a new Birkin costs, how long one would have to wait to get one, and how many bags are actually made each year.

Profile

Company: Libra Project

Based: Masdar City, ADGM, London and Delaware

Launch year: 2017

Size: A team of 12 with six employed full-time

Sector: Renewable energy

Funding: $500,000 in Series A funding from family and friends in 2018. A Series B round looking to raise $1.5m is now live.

Company profile

Company name: Nestrom

Started: 2017

Co-founders: Yousef Wadi, Kanaan Manasrah and Shadi Shalabi

Based: Jordan

Sector: Technology

Initial investment: Close to $100,000

Investors: Propeller, 500 Startups, Wamda Capital, Agrimatico, Techstars and some angel investors

The years Ramadan fell in May

1987

1954

1921

1888

Our legal consultant

Name: Dr Hassan Mohsen Elhais

Position: legal consultant with Al Rowaad Advocates and Legal Consultants.

Abu Dhabi Equestrian Club race card

5pm: Abu Dhabi Fillies Classic (PA) Prestige; Dh110,000; 1,400m
5.30pm: Abu Dhabi Colts Classic (PA) Prestige; Dh110,000; 1,400m
6pm: Maiden (PA); Dh80,000; 1,600m
6.30pm: Abu Dhabi Championship (PA) Listed; Dh180,000; 1,600m
7pm: Wathba Stallions Cup (PA) Handicap; Dh70,000; 2,200m
7.30pm: Handicap (PA); Dh100,000; 2,400m

Test

Director: S Sashikanth

Cast: Nayanthara, Siddharth, Meera Jasmine, R Madhavan

Star rating: 2/5

How to watch Ireland v Pakistan in UAE

When: The one-off Test starts on Friday, May 11
What time: Each day’s play is scheduled to start at 2pm UAE time.
TV: The match will be broadcast on OSN Sports Cricket HD. Subscribers to the channel can also stream the action live on OSN Play.

COMPANY PROFILE
Name: Kumulus Water
 
Started: 2021
 
Founders: Iheb Triki and Mohamed Ali Abid
 
Based: Tunisia 
 
Sector: Water technology 
 
Number of staff: 22 
 
Investment raised: $4 million 
COMPANY PROFILE
Name: ARDH Collective
Based: Dubai
Founders: Alhaan Ahmed, Alyina Ahmed and Maximo Tettamanzi
Sector: Sustainability
Total funding: Self funded
Number of employees: 4
The specs

Engine: Four electric motors, one at each wheel

Power: 579hp

Torque: 859Nm

Transmission: Single-speed automatic

Price: From Dh825,900

On sale: Now

if you go