A unilateral move by Abu Dhabi, oil-rich capital of the United Arab Emirates, to recapitalise its own banks has sparked fears that it may hesitate to support Dubai, its fellow emirate and commercial rival, as the credit crunch worsens.
A senior Abu Dhabi official said Wednesday’s decision to inject Dh16bn of capital into its five banks, but ignore other banks of the seven-emirate federation, was meant to add an addition layer of protection for local houses.
Bankers warned on Thursday that Abu Dhabi’s go-it-alone attitude could mean that the federal government may not be as willing as expected in rescuing Dubai entities which face default.
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