Bank battens down hatches in a storm

* username: rupertbu

Being a bank in the UAE lately has been about as easy as staying adrift in a leaky boat during a nasty storm.

Property loan books have felt the brunt of price declines in Dubai, estimated at up to 50 per cent in some places. Corporate lending has not provided much shelter, either, due to defaults last year at several large regional firms. If banks thought retail loans might rescue them, they were wrong. Defaults on everything from credit cards to mortgages rose last year, bankers say.

As if that is not enough, they are also coping with competition for deposits that has made bringing in new money more costly. That, in turn, has pushed some lenders to increase rates on loans and revise how they calculate interest on variable-rate mortgages, a move that has caused considerable tension with customers.