Dubai Debt May Exceed $80 Billion on Off-Balance Sheet Liability, UBS Says

Discussion in 'Wall St. News' started by Daal, Nov 27, 2009.

  1. UAE has 98 billion barrels of oil reserve. Which is worth about $7.3 trillion dollars. Why are they worry about $184 billion of debt?
     
    #11     Nov 27, 2009
  2. I'm no expert, prognosticator or brilliant economist, but this shit worries me. Maybe I've just seen "Rollover" too many times.
     
    #12     Nov 27, 2009
  3. Maybe Obama should backstop this debt also, and launch a stimulus plan for Dubai...
     
    #13     Nov 27, 2009
  4. ess1096

    ess1096

    Rory is an incredible talent with a Tiger-Like future ahead of him!
     
    #14     Nov 27, 2009
  5. Fools. Today was a great moneymaker day. :)
     
    #15     Nov 27, 2009
  6. clacy

    clacy

    Seriously........ don't give them any ideas.
     
    #16     Nov 27, 2009
  7. how much does it cost to extract that oil from the ground?

    And how long will it last?
     
    #17     Nov 28, 2009
  8. Bump up oil prices....get rid of the debt...go buy more soccer clubs....neglect your people....have overpriced buildings....things will be normal in Dubai in no time.
     
    #18     Nov 28, 2009
  9. European banks most exposed to UAE debt [UPDATED]


    Here’s a nifty breakdown of global banks’ exposures to the United Arab Emirates, via Reuters on Friday.

    According to the Bank for International Settlements, banks have claims totalling $123bn on debtors in the UAE, $88bn of which are held by European banks and $50bn by UK banks alone.

    [​IMG]

    UPDATE: The eagle-eyed head of web communications at the BIS points out Taipei, with $1.63bn in exposure, ought to have made it into Reuters’ list.
    Caveat from Reuters:
    The BIS does not break down the claims by the individual Emirates. Country-by-country data are given for the 30 countries reporting to the BIS, while the total reflects a broader sample also including Taiwan, Hong Kong, India and other countries. The most recent data are as of June 2009.

    (H/T Gordon Smith)

    BNP Paribas also commented on banks’ exposures to the region in a note on Friday (emphasis FT Alphaville’s):
    Dubai has $80bn of gross debt, $22bn of which are in Dubai World.

    Most banks do not disclose exposure by country in the Middle East, let alone for Nakheel or Dubai World. However, a 2008 document published by the Emirates Banks Association mentions the top foreign banks by lending (in the UAE rather than purely Dubai). The exposures, while large in some cases, appear to be manageable when considered as a percentage of total loans (Table 2).

    [​IMG]

    Given these numbers, Standard Chartered is the only one worth discussing in more detail, as HSBC is too large a group for the exposure to be worrisome.

    According to our banks analysts, shareholders equity at end June 2009 was $23.3bn and core Tier 1 capital was around $18.2bn (for RWAs of $205bn). If we assumed a 100% loss of $400mn on the Dubai CRE exposure, that would represent 2.2% or 19.5bp of core Tier 1 and the core Tier 1 ratio would go from 8.9% to 8.7%, which is very manageable. We would argue as well that any core Tier 1 ratio above 8% is satisfactory, so StanChart could afford to lose $1.8bn until its core Tier 1 ratio reaches 8%. This would represent 23% loss ratio on the lending exposure to the UAE, which seems possible, but perhaps exaggerated.

    In sum, we see Standard Chartered as potentially the most impacted by the situation in Dubai. However, we are not overly concerned given the bank’s current capital position, its earnings generation (it is well positioned in Asia, an outperforming economic area) and the uncertainty regarding the losses on Dubai or UAE exposures.

    http://ftalphaville.ft.com/blog/2009/11/27/85801/european-banks-most-exposed-to-uae-debt/
     
    #19     Nov 28, 2009
  10. kxvid

    kxvid

    Excellent info ASusilovic thanks.
     
    #20     Nov 28, 2009