Alaa Eraikat, CEO of ADCB, has disclosed that the bank has about AED 9 billion (US$2.45 billion) in exposure to Dubai World "about half of which are supported by collateral and income streams from infrastructure and other projects".
As of yet, ADCB has not taken any provisions on Dubai World because the loans are still performing.
He also noted: “This is what I tell you makes a big difference [and explains] why we feel comfortable here [with our Dubai World exposure] rather than the lending to Saad and Gosaibi.” Wise words indeed.
And that of the AED2.1 billion (US$572 million) in 4Q09 provisions, roughly one half were for Saad and AlGosaibi leaving about AED900 million (US$245 million) of exposure to these two companies still on the books.
The bank also provided AED700 million (US$190.7 million) against its AED 1billion (US$ million) of "foreign investments in special investment vehicles and credit default swaps in the US". Mr. Eraikat said that the remaining AED300 million might also "potentially turn toxic".
Two comments:
- At 30 September 2009, ADCB had roughly AED20.1 billion in equity. It's exposure to Dubai World is roughly 45% of equity. That seems a rather high percentage.
- Ambition unaccompanied by intellect is a recipe for disaster.
Posts
No comments:
Post a Comment