Bank chiefs have launched a loan-restructuring scheme for indebted businesses where lenders work together to help firms to reduce their debt burden.
The UAE Banking Federation (UBF) revealed the plan yesterday aimed at struggling small and medium-sized enterprises (SMEs).
The move comes as progress on the country’s long-awaited insolvency law, which contains a similar framework for the restructuring of corporate debts, has stalled.
Under the terms of the UBF plan, which has been in development since late last year, an SME with multiple loans that is experiencing difficulties can opt to enter the scheme, whereby lenders "coordinate their position and work to assist the company in restructuring its future repayments".
The UBF did not say which SMEs would be eligible for the initiative, or when it would come into effect.
“Lending to SMEs is a high priority for us and we have agreed now on a plan which will definitely be a win-win for all involved,” said the UBF’s chairman Abdul Aziz Al Ghurair.
“This again reflects banks’ commitment to apply a coordinated approach, to alleviate SME-funding difficulties and continue banks’ support to the SME sector being vital to the national economy,” said Mr Al Al Ghurair, who serves as the chief executive of Mashreq.
Small businesses have been hit hard by an economic slowdown triggered by a sharp decline in the price of oil and made worse for some exporting companies by a strong US dollar, to which the UAE dirham is pegged.
The UBF warned in November that a number of small business owners were fleeing the country, leaving unsettled debts totalling about Dh5 billion. “It’s a really serious situation for SMEs right now, and they could have a serious impact on the wider economy,” said a senior executive at a local bank, who asked not to be named. The sector consists of about 300,000 companies, accounting for 86 per cent of the UAE’s private sector workforce, according to the Ministry of Economy.
The investment bank EFG-Hermes last month warned that the fallout sparked by rising SME bad debts might spread to individual banks, with provisioning levels rising for the first time since 2013.
“We urge caution in 2016, particularly as we expect a second wave of provisioning from the retail segment following a surge in delinquencies,” said Shabbir Malik, an analyst at EFG-Hermes investment bank in a research note.
Dubai’s largest bank, Emirates NBD, this week reaffirmed its commitment to UAE-based SMEs, but admitted that such companies faced a difficult 2016.
"They are the businesses that have the least power to pull in cash," the bank's chief executive Shayne Nelson told The National this week.
“As liquidity is tightening in this market, they feel it more than anyone else.”
The move by the UBF to introduce the debt-repayment mechanism comes in the absence of a modern insolvency law, allowing companies to be put into administration while their finances are reorganised
A new insolvency law, based on French insolvency practices, was given the green light by the Cabinet in July, but has yet to be referred to the Federal National Council for approval, according to a federal Government source.
Crucially, the new law contains provisions regarding bounced cheques, allowing companies to escape criminal charges for bouncing cheques while undergoing an administration process.
jeverington@thenational.ae
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Our legal columnist
Name: Yousef Al Bahar
Advocate at Al Bahar & Associate Advocates and Legal Consultants, established in 1994
Education: Mr Al Bahar was born in 1979 and graduated in 2008 from the Judicial Institute. He took after his father, who was one of the first Emirati lawyers
Honeymoonish
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'Ghostbusters: From Beyond'
Director: Jason Reitman
Starring: Paul Rudd, Carrie Coon, Finn Wolfhard, Mckenna Grace
Rating: 2/5
Diriyah%20project%20at%20a%20glance
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10 tips for entry-level job seekers
- Have an up-to-date, professional LinkedIn profile. If you don’t have a LinkedIn account, set one up today. Avoid poor-quality profile pictures with distracting backgrounds. Include a professional summary and begin to grow your network.
- Keep track of the job trends in your sector through the news. Apply for job alerts at your dream organisations and the types of jobs you want – LinkedIn uses AI to share similar relevant jobs based on your selections.
- Double check that you’ve highlighted relevant skills on your resume and LinkedIn profile.
- For most entry-level jobs, your resume will first be filtered by an applicant tracking system for keywords. Look closely at the description of the job you are applying for and mirror the language as much as possible (while being honest and accurate about your skills and experience).
- Keep your CV professional and in a simple format – make sure you tailor your cover letter and application to the company and role.
- Go online and look for details on job specifications for your target position. Make a list of skills required and set yourself some learning goals to tick off all the necessary skills one by one.
- Don’t be afraid to reach outside your immediate friends and family to other acquaintances and let them know you are looking for new opportunities.
- Make sure you’ve set your LinkedIn profile to signal that you are “open to opportunities”. Also be sure to use LinkedIn to search for people who are still actively hiring by searching for those that have the headline “I’m hiring” or “We’re hiring” in their profile.
- Prepare for online interviews using mock interview tools. Even before landing interviews, it can be useful to start practising.
- Be professional and patient. Always be professional with whoever you are interacting with throughout your search process, this will be remembered. You need to be patient, dedicated and not give up on your search. Candidates need to make sure they are following up appropriately for roles they have applied.
Arda Atalay, head of Mena private sector at LinkedIn Talent Solutions, Rudy Bier, managing partner of Kinetic Business Solutions and Ben Kinerman Daltrey, co-founder of KinFitz
The%20specs
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THE SPECS
Engine: 6.75-litre twin-turbocharged V12 petrol engine
Power: 420kW
Torque: 780Nm
Transmission: 8-speed automatic
Price: From Dh1,350,000
On sale: Available for preorder now
Specs%20
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UAE currency: the story behind the money in your pockets
Zayed Sustainability Prize
UAE currency: the story behind the money in your pockets
MATCH INFO
Maratha Arabians 107-8 (10 ovs)
Lyth 21, Lynn 20, McClenaghan 20 no
Qalandars 60-4 (10 ovs)
Malan 32 no, McClenaghan 2-9
Maratha Arabians win by 47 runs
THE%20SWIMMERS
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BIGGEST CYBER SECURITY INCIDENTS IN RECENT TIMES
SolarWinds supply chain attack: Came to light in December 2020 but had taken root for several months, compromising major tech companies, governments and its entities
Microsoft Exchange server exploitation: March 2021; attackers used a vulnerability to steal emails
Kaseya attack: July 2021; ransomware hit perpetrated REvil, resulting in severe downtime for more than 1,000 companies
Log4j breach: December 2021; attackers exploited the Java-written code to inflitrate businesses and governments
Sole survivors
- Cecelia Crocker was on board Northwest Airlines Flight 255 in 1987 when it crashed in Detroit, killing 154 people, including her parents and brother. The plane had hit a light pole on take off
- George Lamson Jr, from Minnesota, was on a Galaxy Airlines flight that crashed in Reno in 1985, killing 68 people. His entire seat was launched out of the plane
- Bahia Bakari, then 12, survived when a Yemenia Airways flight crashed near the Comoros in 2009, killing 152. She was found clinging to wreckage after floating in the ocean for 13 hours.
- Jim Polehinke was the co-pilot and sole survivor of a 2006 Comair flight that crashed in Lexington, Kentucky, killing 49.
Dr Afridi's warning signs of digital addiction
Spending an excessive amount of time on the phone.
Neglecting personal, social, or academic responsibilities.
Losing interest in other activities or hobbies that were once enjoyed.
Having withdrawal symptoms like feeling anxious, restless, or upset when the technology is not available.
Experiencing sleep disturbances or changes in sleep patterns.
What are the guidelines?
Under 18 months: Avoid screen time altogether, except for video chatting with family.
Aged 18-24 months: If screens are introduced, it should be high-quality content watched with a caregiver to help the child understand what they are seeing.
Aged 2-5 years: Limit to one-hour per day of high-quality programming, with co-viewing whenever possible.
Aged 6-12 years: Set consistent limits on screen time to ensure it does not interfere with sleep, physical activity, or social interactions.
Teenagers: Encourage a balanced approach – screens should not replace sleep, exercise, or face-to-face socialisation.
Source: American Paediatric Association
How to turn your property into a holiday home
- Ensure decoration and styling – and portal photography – quality is high to achieve maximum rates.
- Research equivalent Airbnb homes in your location to ensure competitiveness.
- Post on all relevant platforms to reach the widest audience; whether you let personally or via an agency know your potential guest profile – aiming for the wrong demographic may leave your property empty.
- Factor in costs when working out if holiday letting is beneficial. The annual DCTM fee runs from Dh370 for a one-bedroom flat to Dh1,200. Tourism tax is Dh10-15 per bedroom, per night.
- Check your management company has a physical office, a valid DTCM licence and is licencing your property and paying tourism taxes. For transparency, regularly view your booking calendar.