Two multimillionaire Indians and the lax attitude of the big banks towards them can land the UAE in financial trouble
Big banks in the Middle East have a lot to worry about. The price of oil, on which the region thrives, has crashed. Lockdowns have badly impacted the earnings of local businesses. The closure of borders is hurting airlines and hotels.
Shetty, 77, has seen a tremendous rise in fortune since he started working in the UAE’s healthcare industry in the 1970s. In his own words, he had come to UAE with onlyOver the years, he built hospitals and healthcare facilities and expanded into remittance transfer service. In 2012, NMC became the first company from the UAE to be listed on the London Stock Exchange. Its IPO raised more than $142 million.
Although NMC’s profits have continuously increased year after year, there was something unusual about the way the group was handling its debt. UAE banks, which together have loaned $2 billion to Shetty’s group, risk losing 25 percent to 50 percent of their loans. Abu Dhabi Commercial Bank alone has an exposure of $981 million, the biggest among local lenders, as well as an additional $181 million to Finablr, a London-listed remittance holding owned by NMC.
In both cases, the investors and regulators didn’t realise that the borrowed funds were being misused. to the troubled agri-trading company, Phoenix Commodities. This week the First Abu Dhabi Bank disclosed that it has an exposure of $73 million to Phoenix, which is owned by Dhawan.
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