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Saturday, 6 March 2010
Big banks renegotiate more loans (Delayed posting)
The country’s three biggest banks have renegotiated more than Dh15 billion (US$4.08bn) in loans, raising concern that the balance sheets of local lenders may be weaker than previously believed.
This comes after a year in which UAE banks tripled provisions for bad loans as customers defaulted and corporate borrowers were unable to pay back loans taken out during the boom years.
The dramatic rise in renegotiated loans has triggered worries that the practice, which is known as evergreening, may mask the full extent of lending that could turn sour. Analysts said some banks now ran the risk of not being repaid on borrowing that would be better classified as non-performing.
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