ABU DHABI // Khaled Al Noobi’s wife divorced him because she no longer wanted to live with a man so heavily in debt.
“I don’t blame her,” the Emirati said. “I couldn’t put food on the table and was wanted by the police for my debts.”
His wife decided the Government was a more stable option than her husband.
“She’s right,” he said. “Now she’s divorced she gets welfare and is sure that a steady amount will come in each month. I couldn’t give her that.”
Mr Al Noobi, 40, said he knows of many Emirati families that have been destroyed by debt.
“Yes, I am ashamed but there is nothing that I could do. I made a mistake and now will spend the rest of my life paying for it.”
His mistake was taking his business from bank to bank on the promise of a bigger loan with the same payment.
In 2006, “I took out a personal loan from Emirates Bank for Dh375,000 that amounted to Dh450,000 with the interest.
“I needed the money to send my mother abroad for treatment, buy a car to take me to work and to build an extension at my parents’ house to live in.”
Mr Al Noobi was making Dh11,000, working for an aluminium company. “The bank used to deduct Dh6,000 for the loan and for a year I was fine.”
When he needed more money, the bank refused.
“Dubai Bank agreed to give me a loan as long as I transferred my salary to their bank and they would buy my old loan,” he said.
“The bank said they would give me a commercial loan and they had already taken over my personal loan from Emirates Bank, so I had two loans.”
His debt reached Dh750,000.
“I needed another loan and Dubai Bank refused.” Mr Al Noobi went to Etihad Bank, which bought his previous loan and gave him another Dh150,000.
He found himself Dh1 million in debt and without a job. An arrest warrant was issued after he stopped making payments.
Then his wife left. “I swear I never knew that I would end up like this,” he said. “I don’t want my children to go through this.
“Everyone thinks Emiratis are in debt to play around or buy fancy cars but that’s not true. We are in debt because we want to send our families abroad to get the best medical treatment or build our own houses or send our children to the best schools.”
salnuwais@thenational.ae
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About this special report:
A study by McKinsey & Company in 2011 showed that 70 per cent of UAE nationals younger than 35 are in debt. Car loans are the most popular with Emiratis and unregulated banks do nothing to improve the situation by encouraging locals to take out unsecured loans up to four times their annual salaries. Non-payment of loans has led to countless arrest warrants and jail time. Last year, 3,638 Emiratis had cases filed against them in Abu Dhabi judicial courts for bounced cheques. As a result, the Emirates Foundation and the Ministry of Education have teamed up to educate young people, and tackle the problem of financial illiteracy that plagues the country.
Read more:
■ UAE debt problem to be tackled at school level
■ Case Study: Despite loan relief, Emirati man still has huge debt
■ Case Study: Emirati couple believes bank tricked them into unbearable debt
List of UAE medal winners
Gold
Faisal Al Ketbi (Open weight and 94kg)
Talib Al Kirbi (69kg)
Omar Al Fadhli (56kg)
Silver
Zayed Al Kaabi (94kg)
Khalfan Belhol (85kg)
Zayed Al Mansoori (62kg)
Mouza Al Shamsi (49kg women)
Bronze
Yahia Mansour Al Hammadi (Open and 94kg)
Saood Al Hammadi (77kg)
Said Al Mazroui (62kg)
Obaid Al Nuaimi (56kg)
Bashayer Al Matrooshi (62kg women)
Reem Abdulkareem (45kg women)
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
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