UAE banks could be forced to embark on mergers this year to escape the adverse effects of a sharp slowdown in the domestic economy and the global credit crunch, a key Saudi bank and economists said yesterday.
A steep fall in fourth quarter profits by most banks that have released financial results for 2008 signalled a tough year ahead and this should prompt further support by the UAE Government, the Saudi American Bank (Samba) said.
In a study sent to Emirates Business, Samba said that despite recent cash injections by the government into some banks and other measures, UAE bank credit growth is projected to sharply slow down this year as many of them are concerned about asset quality in a slowing economic environment while others are streamlining lending activities and striving to boost deposits.
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