Spreading the risk is a central tenet of commercial banking around the world. Loans to numerous borrowers, in many and varied sectors of the economy and society, are the best defence against unforeseen crisis, default and collapse.
The International Monetary Fund, the world economy's steward of stable growth, regularly assesses national banking systems. While deeming the UAE's banking network reasonably stable, the IMF has been saying since March that the UAE's Central Bank should monitor risk management at individual banks.
Loans to Europe are one concern, but again this May the IMF also cited "increasing credit concentration" in lending to "government-related enterprises" (GREs), the numerous, prominent operations that inhabit the borderlands between the private sector and Government in the UAE. After the Dubai World crisis of 2009, the IMF says bluntly, "market perceptions of sovereign default risk remain elevated". This is why total GRE debt rose past $176 billion (Dh646bn) last year. The IMF also said more information about GRE debts would improve lenders' confidence.
No comments:
Post a Comment