DUBAI (Reuters) – Banks in the United Arab Emirates could be forced to consider mergers to face the ramifications of the global credit crisis, Emirates NBD’s chairman said in remarks published on Thursday.
Shareholders in listed banks currently lacked the ability to inject capital into banks through capital increases, thus necessitating mergers to create bigger banks, Ahmed al-Tayer said, according to daily al-Khaleej.
“The banking sector was not affected by the losses witnessed by international banks and its performance in terms of portfolios and credit remains unaffected,” the paper cited Tayer as saying.
He said banks had “started to overcome some of the impact resulting from withdrawals by some investors”, the paper added.
The UAE central bank last month opened a 50 billion dirham ($13.61 billion) emergency lending facility to help banks cope with the credit crisis, and said this month it would inject 70 billion dirhams of new cash into the banking system, although it has yet to release details on how this would be done.
Stock markets in the Gulf region are tracking a global market rout. Dubai’s main index .DFMGI tumbled more than 6 percent as of 2:34 a.m. EDT on Thursday, extending a more than 40 percent drop — the worst in the Gulf region — this year.