Major lenders scramble to assess losses

Banks were scrambling to quantify potential losses in Dubai after Dubai World, the state’s holding company, shocked creditors by asking to halt debt repayments.

Lenders such as Deutsche Bank, Credit Suisse, Citigroup and Barclays stressed privately on Thursday that their exposure to Dubai World was limited or insignificant. But industry analysts suggested that a deterioration of economic conditions in the emirate could trigger billions in losses.

European banks might have up to $40bn (€27bn, £24bn) of exposure to debt issued by Dubai state-owned entities, according to a Credit Suisse research note published by Credit Suisse. Dubai World accounts for about $60bn of the city-state’s $80bn liabilities, of which analysts estimate half is held by European banks.