Financial experts and analysts said that the volume of loans granted by banks to the "NMC" for health care and its affiliates, shows the absence of a clear mechanism for lending, or a logical explanation of the way in which approvals for such funds were taken.
They assured «Emirates Today» that the arrival of the local debt amount to 10 billion dirhams from 15 destination banks, reflects the banks ’uncertainty of the adequacy of the guarantees that have been provided, noting that the credit inquiry should become mandatory for companies, in addition to the role of internal control in the follow-up of management personnel Risks in banks to prevent overruns.
Guarantees
In detail, the financial analyst, Waddah Al-Taha, said that some banks used in times of crisis to ask for guarantees covering 130% of the value of the loan granted, in anticipation of market conditions or the decrease in the value of the assets provided, and away from lending to the name, or simply because other larger banks provided loans .
He added that «all these reservations were absent when lending to the (NMC) Healthcare Group and its subsidiaries, as the creditworthiness of the company was not confirmed, nor did it take adequate independent guarantees, or auditing its financial suitability and future flows, otherwise all these discoveries would not have occurred .
Al-Taha indicated that the company’s debt size is large for local and international banks, as it reaches 10 billion dirhams from 15 local banks, showing uncertainties about the adequacy of guarantees and their use by more than one bank, and the acceptance of these banks participating in the guarantee or lending itself based on the name, despite what is in it Of great risks, or the company’s dealings with larger banks, taking loans from them, and then proceeding to lending without adequate scrutiny.
Lending mechanism
Al-Taha said that all of these factors show the lack of clarity in the mechanism of lending «NMC» and its subsidiaries, especially that the sums are large, and their value requires approvals that reach even the boards of directors of these banks, and to ensure future cash flows, and other matters that are reserved for any default. Pointing out that a number of exposed banks are classified as small, provided large sums to the troubled company, which exposes them to a clear impact on its profits.
Al-Taha stressed the importance of establishing regulatory controls for corporate lending, closely monitored by the Central Bank, to prevent the recurrence of such troubles that undoubtedly affect the profits of banks.
Credit Inquiry
For his part, the financial analyst, Tariq Qaqish, said that «the size of the debt (NMC) came greater than that recorded in its books and financial statements announced, which explains the existence of manipulations in these books and their budgets, and this bears part of the auditors in addition to the employees».
"The credit query should become mandatory for companies, in addition to the corporate boards of directors playing their role in full transparency, and preventing any information from being hidden, in order to avoid similar incidents," Qaqish added.
He stressed that «the banks did not take adequate guarantees in the process of lending (NMC), and this requires the existence of coordination with the central bank to monitor the banks’ risk departments, and to ensure that exposure is not exposed to such a large degree.
Internal control
In turn, said financial expert and tax agent, Mohamed Helmy, that «there is a role of internal control in the follow-up of risk management employees in banks, to prevent and address cases of overrun, a role that needs to be strengthened to prevent the recurrence of what happened in lending (NMC) and its subsidiaries ».
Helmy added that «there are qualities and skills that must be present in the employees of risk and compliance departments, foremost of which is the ability to identify and evaluate risks and deal with them, and to develop proactive plans besides competence and professional care», pointing to the importance of the role of training and development for the employees of these departments, because of its direct impact Ensure non-tripping or non-guaranteed exposure.
Conglomerates
A banker, who preferred not to be named, said that "there is leniency in granting funds to some large companies without guarantees, because of the known blocs within each bank, and its most important goal is to obtain bonuses without regard for the losses caused by such behavior that are repeated every several years in the same way" .
He added that «the matter needs joint efforts by the central bank, the Federation of Banks, and the boards of directors of the banks themselves, to put an end to wasting the banks’ funds in this way that is no longer acceptable in light of the possibilities that the Emirates has.
Experts stressed the importance of internal control in monitoring bank risk management employees.