Abu Dhabi Banks' Exposure to Dubai

As per Maktoob:  "Abu Dhabi Commercial Bank has at least 8-9 billion dirhams ($2.2-$2.5 billion) exposure to Dubai World and related entities, forcing the bank to book more provisions, a senior executive of the bank said. First Gulf Bank has at least 5 billion dirhams ($1.4 billion)".  Followers of Middle Eastern finances will recall that to date among UAE banks who have declared their exposures, ADCB is the largest lender to Saad/AlGosaibi with some US$609 million equivalent.

At 3Q09, ADCB had some AED20 billion in equity.  At that date FGB had AED22 billion.  Both banks should be able to withstand the shock.  The Abu Dhabi Government is not going to let these banks fail - particularly given their connection to the government.  One is 65% or so owned by the Emirate of Abu Dhabi.  The other has a "major" ownership stake by the sons of Sheikh Zayed (deceased father of the current Amir).

Other Abu Dhabi banks are likely to have significant exposures to Dubai.

Perversely, these large exposures may be good news for Dubai as one would expect these banks to take a softer line in any restructuring because of the government connection.