UAE banks have remained the largest debtor in the oil-rich Gulf over the past few years because of a surge in borrowing from abroad to meet a sharp growth in demand for domestic credit, according to a key Western finance centre.
The leap in UAE banks' debt by nearly four times in around three years was also a result of a rush by foreign banks to invest their funds in UAE banks in anticipation of an appreciation in the dirham against the US dollar, according to the Washington-based International Institute for Finance (IIF).
From around $23.2 billion (Dh85.2bn) at the end of June 2005, the combined external debt of the UAE's 52 banks jumped to a record $92.5bn at the end of June 2008, said the IIF, which groups several major Western banks.
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