Al-Jazeera Net - Kuwait
The Emirati banking sector is experiencing a heightened state of concern due to the exposure of several local banks to the troubled Emirati Hospital Management Company (NMC Health) and its subsidiaries, Emirates Exchange, and the Finable payment solutions group.
The reason for this concern is that these banks granted hundreds of millions of dollars in loans to the company, which appears to be close to declaring bankruptcy, despite repeated talk of trying to restructure it to avoid the worst scenario.
Abu Dhabi Commercial Bank announced its exposure to the company by $ 981 million, Dubai Islamic Bank and its Noor Bank by 531 million, Abu Dhabi Islamic Bank by about 322 million, Emirates NBD with more than 203 million, the Commercial International Bank by 116 million, and Bank National Fujairah with approximately 79 million, and Ajman Bank about 42 million.
It is not only the UAE banks that have announced their exposure to NMC Health. Several other Bahraini and Kuwaiti Gulf banks have announced their exposure to the company as well, including the National Bank of Kuwait with more than $ 91 million, and the Bank of KIB (more than 73 million) , And Warba Bank, about 66 million, and Al Ahli Bank of Kuwait, about 44 million.
Thus, the total proceeds of loans granted by these banks collectively to the troubled company amount to about three billion dollars, of which the UAE banks share more than two billion.
Besides local banks, the global lenders - including Hong Kong and Shanghai Banking Services Company, JP Morgan Chase and Standard Chartered Company - also owe the company that is affiliated with Abu Kabir Kabard. Also, some lenders are currently in talks to form a committee to discuss how to get the money back, according to a report by Bloomberg.
The collapse of banks
In this context, Kuwaiti economic analyst Eid Al-Shehri said - in a special statement to Al Jazeera Net - that the most important point for any bank to be exposed to any troubled party is the size of this exposure compared to profits.
Al-Shehri pointed out that "the risk in this matter lies in the shaking of the bank's reputation and the people's loss of confidence in it," saying that "the occurrence of such an issue may lead to a state of panic accompanied by the withdrawal of deposits, which may lead to the collapse of banks."
He stated that the occurrence of such a scenario would prompt governments to intervene in order to save the banks, and the supervisory authorities would force them to merge in order to reduce costs and cohesion in order to get out of the crisis, which would have heavy repercussions on the economy as a whole.
On the other hand, Al-Shehri saw that the banks ’exposure and losses due to the failure of“ NMC Health ”indicates the inefficiency of the employees of these banks, as they should have been more accurate and exert more efforts to know the value of the company and inspect the disclosed amounts of its assets, indicating that the exposure The big one is a concern, especially as it may be a precursor to other economic problems that may occur in the future.
While observers stressed that the difficult economic situation - which the UAE is going through at the moment due to the spread of the Corona virus - increases the mud of its banks' exposure to injury, Kuwaiti economist Mohammed Al-Thamer ruled out the impact of Kuwaiti local banks significantly, unlike their Emirati counterparts, especially as the regulatory standards in Kuwait and the size The allocations earned by banks are very high.
Al Thamer said - in a special statement to Al Jazeera Net - that all Kuwaiti banks have a superior provisioning system, and they also have plans to deal with such difficulties.
In a related context, said Joyce Matthew, Head of Equity Research at “United Securities in Amman” “It seems that this reality will be very painful for the banks,” adding in statements made by Bloomberg that the economy has run afoul of the economy. The sheer size of exposure cases will add to the pressure on the profitability of these banks and will burden their shares. ”
Meanwhile, Faisal Belhoul, the new CEO of NMC Health, came out in a press conference by telephone, to confirm that the company is currently negotiating with all 75 creditor banks and banks, explaining that the banks are disturbed by what happened, but we demand With a clear and open dialogue and action plan to reach solutions that serve all parties. "
Belhoul pointed out that the data announced by the banks on the size of borrowing amounted to 6.6 billion dollars, which are troublesome figures and were not taken into account, adding: "We have started negotiations and have come a long way, but the large number of banks and the size of debt is a major challenge in a short period of time."
According to a Reuters report, NMC - which was founded by Indian businessman Dr. BR Shetty in Abu Dhabi in 1985 - recently revised its debt figures to $ 6.6 billion, a number much higher than previous estimates, since Modi questioned Waters International Investment Company data of the Emirates Financial.
The company’s new CEO has called for the suspension of the debt repayment, saying he will work with the British and Emirati authorities to recover money that may have been misused from the previous administration.
On February 14th, NMC said it was continuing to try to disclose the details of the holdings of its major investors after announcing the resignation of one of its largest shareholders from its board of directors, and after the announcement of British regulatory authorities to examine the company’s conditions after information that Shetty did not disclose accurately About his share in it.
There are fears looming over the possibility that Shetty's financial problems could be extended to other companies he is linked to, including Emirates Exchange and the Venable Group that he helped found in 2018, at a time when several reports have spoken of suspicion of a large fraud in this file, many of whose details are still vague .
Many observers have questioned the role of the financial and regulatory systems and agencies and the UAE audit offices in front of this scandal, which from the viewpoint of some constitutes a severe blow to the image of the entire UAE economy.
According to press reports, shortly after the beginning of the Qatar siege in mid-2017, the UAE instructed Shetty, who is close to the Crown Prince of Abu Dhabi, to strike the Qatari currency through the initiation of Emirates Exchange Company through its branches located in the British capital London with fake sales of the Qatari riyal to suggest that the currency The Qatari economy is on the verge of collapse.