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Monday, 16 March 2009

Dubai's Mashreq to convert state deposits to capital

Dubai-based Mashreq said on Monday it would convert federal government deposits into regulatory capital after similar moves by several UAE banks seeking to improve asset quality as the financial crisis bites.

Banks in the second-largest Arab economy, where former boomtown Dubai is facing a real estate price correction, are looking to shore up their stockpile of capital as loan defaults mount and they take provisions for more bad loans to come.

Banks across the oil-producing Gulf have written down the value of investments and taken provisions against an expected rise in bad loans after the region's economic boom came to an end late last year as oil prices collapsed.