United Arab Emirates’ central bank has asked banks to raise provisions against loans to the Saudi family owned groups Ahmad Hamad Algosaibi and Brothers (Ahab) and Saad Group from 50 per cent to 80 per cent.
The demand, in a circular to UAE-based lenders, comes as the regulator takes an increasingly conservative approach to the exposure of financial institutions to the troubled Saudi groups, which are locked in a series of legal disputes. The furore has rocked Gulf financial institutions, raising questions about lax credit practices where “name lending”, or issuance of loans on reputation alone, have come under scrutiny.
The UAE central bank called on domestic and international banks based in the country to set aside money for bad loans by the end of 2010.
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