UAE Banks' Lending To Stay Tight After Dubai World

UAE banks are likely to keep a tight lid on lending in coming years, even if the sector manages to avoid an immediate hit from the Dubai World debt restructuring, analysts say. The state-owned conglomerate, which is grappling with $26 billion in debt, is in the final stages of preparing a debt restructuring plan to put to its 97 creditors. Analysts have voiced concerns that domestic lending would dry up if banks are forced to take big losses on Dubai World-related debt. The IMF estimated banks across the region would have to raise $10 billion in funds if they were forced to absorb a 50 percent loss, or "haircut", on their Dubai World loans. The UAE banking sector, already crippled by large-scale defaults in Saudi Arabia and the Dubai property bubble, is struggling to reach pre-financial crisis profit levels. Read more.