Foreign lenders are threatening Dubai with a fresh debt headache. The UK's Royal Bank of Scotland, South Africa's Standard Bank and Germany's Commerzbank have launched a lawsuit against Dubai Group, an entity owned by the emirate's ruler Sheikh Mohammed. The move threatens to derail a two-year effort between
40-odd creditors to agree terms to restructure $10 billion of debt. But the banks playing hardball might be able to afford the political fallout.
Dubai Group has been left hung out to dry by the government, a contrast to the billions of dollars in financial support extended to Dubai World in 2009. Dubai Group's diverse assets include minority stakes in banks around the world and German shopping centres, but are not strategically important to the emirate. Dubai may also be keen to reserve spare cash for a second restructuring of Dubai World, which may become necessary in 2015.
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