We have predicted since last year that most banks will fail in UAE as well as across GCC.
At this point we do not even wish to count how many mergers or branch closures or job cuts are going on.
This week alone news has appeared about 7 different banks across UAE who are going to merge in the next few months.
Thousands of bankers & associated jobs will be lost, hundreds of branches will shut and more foreign banks will leave.
"After a brief hiatus, preliminary talks have been revived, sources said, though it was unclear whether any deal would be restricted to Bank of Sharjah and Invest Bank, or the two would be joined by UAB."
We had warned in Dec that Investbank of Sharjah has been bailed out. After 4 months of silence, news has come out today on what to do but it seems they don't have a solution except merging multiple banks in Sharjah, UAE.
2 days ago, it came on Bloomberg that Noor Bank shall merge with Dubai Islamic Bank.
This indicates Noor Bank is in trouble and needs a bail out because Dubai Islamic is a relatively stronger bank.
Both are not commenting on the news, as is usual.
Meanwhile, Abu Dhabi has it's own set of problems.
They just did the merger of weak First Gulf Bank with the stronger National Bank of Abu Dhabi and closed the deal last year. New bank is called First Abu Dhabi Bank (FAB).
Now Abu Dhabi Islamic Bank is ready to fall (oops, merge).
So they need to merge ADIB with the other 2 banks who had merged last year.
At this point, no one knows who is standing or who is falling.
Obviously, they are denying it so far, as is the worldwide practice.
Abu Dhabi has a serious need for cash.
They are selling whatever assets they can sell, as fast as they can.
Etihad has troubles, oil is down, banks are in trouble, assets like Chrysler building and refineries, chemical plants, shares and real estate etc are all being sold valued at tens or hundreds of billions of dollars.
They just sold a stake in Cepsa, Spain that they have held since 1998 then added to it in 2009 and 2011. Now all of it seems to be sold.
2 weeks ago, news also came that Abu Dhabi wants to sell their massive stake in Canadian chemical giant, Nova Chemicals.
Etihad is looking for more money to lose, they have lost close to USD 5 billion in the last 3 years already.
7 Apr 2019: Etihad Airways to Seek $600 Million Loan for Planes
Abu Dhabi also wants to sell its stake in Jet Airways, India but there is no buyer.
Banks in UAE that are under merger rumors are:
Sharjah: Investbank with United Arab Bank with Bank of Sharjah
Dubai: Noor Islamic Bank with Dubai Islamic Bank
Abu Dhabi: First Abu Dhabi Bank with Abu Dhabi Islamic Bank
Triple bank merger of ADCB with Al Hilal Bank and Union National Bank is still ongoing and may conclude in the next few months.
Advisory Alert: Should any other bank or banks want to merge with the 3 merged banks, they are most welcome to join. :)
No need to pay advisory fees to Goldman Sucks or Shittybank or Stranded & Shattered Bank.
Advisory Alert: Should any other bank or banks want to merge with the 3 merged banks, they are most welcome to join. :)
No need to pay advisory fees to Goldman Sucks or Shittybank or Stranded & Shattered Bank.
We have also heard a rumor which is not in the public domain that this 3 bank merger has decided to close ALL their overseas operations from Jersey to Paris to India to Singapore to Kazakhstan to China and wherever else all 3 banks have operations.
It is not public news yet and is a rumor and not confirmed (but from the board room, so shhhh) hence, we do not have any news links yet. You will hear of it after a few months or clients will start receiving letters in a few weeks.
Overseas clients do not have to worry because this is a closure, not a bankruptcy. All assets are safe.
In case of a closure, clients are always advised to transfer their assets or if the bank sells the business to another local bank then the local bank shall take over.
Overseas clients do not have to worry because this is a closure, not a bankruptcy. All assets are safe.
In case of a closure, clients are always advised to transfer their assets or if the bank sells the business to another local bank then the local bank shall take over.
As if the problems of UAE and Saudi were not enough, Qatar has sued both top banks of UAE and Saudi in London and NY for currency manipulation.
Meanwhile, Dubai is busy arresting expats for silly reasons.
This week, they arrested a British woman for posting on Facebook that her ex husband's new wife looked like a horse.
A few months ago, they arrested another Britisher for a comment on Facebook as well and this news has come out today.
As we always say for Middle East, the worse is yet to come....
What do they do to people that leave with those big car and personal loans...I heard banks can no longer extradite them back unless its in the GCC but noone truly knows...lots of threats and misinformation but banks lend carelessly with the hope of interpol helping, so they dont have to do proper background checks....so can they still extradite with an interpol red notice or does there power stop outside the GCC? Love your articles by the way...always check them out...Ive also been calling for the Dirham de-peg for 6-7 years now...I've lived there for 10 years...traffic jams are a thing of the past, way less people living there now....also what happens if one of the long running rumors of Sheikh Khalifas death being announced during Ramadan comes true....that could be a real shake up to expat bank accounts with bail ins...anything could be on the table...Did you know UAE added a 5% Expat rent/municipality tax..only expats pay this...also Abu Dhabi installed Salik on all the roads a year ago but has not made them active as in my opinion they fear it could be the straw that breaks the camels back (tax wise).
ReplyDeleteHello,
DeleteThank you for visiting and for your comment.
Actually, until 2008-2009 there were no strict rules when anyone ran away. Then they made it tighter and many police cases were filed.
However, even that was insufficient. So after 2015, they actually gave the power to all the banks to press a button and the immigration would get updated.
This has tightened even further now, people who simply have loans perhaps large amounts for business etc, are simply not allowed to leave. Most mortals have no clue what's going on.
The ones who leave are lucky. However, from most countries they cannot be brought back.
But what happens is that their files are sold to collection agencies in local countries. Then they harass and chase them and do whatever they do in each country.
Extradition happens in extremely large cases only that are fool proof. One old case was Madhav Patel who ran away in 1998. He was caught in 2012 and is in some jail whether in India or UAE is uncertain. But bringing back can only happen in very rare circumstances.
I have known people who get picked up without any court orders and the most recent happened whereby this gentleman who owns UHY Saxena Accountants named Rajiv Saxena was picked up from his home on the Palm or Emirates Hills not sure where, at 5.30am and by 7.30am he was airborne and by 12 noon he was sitting in the most infamous jail of India in New Delhi. Along with him another gentleman Deepak Talwar was a fixer in New Delhi arms deals also went along in the same plane and same jail cell with no court papers whatsoever.
They call it "cooperation". lol
https://www.indiatoday.in/india/story/uae-government-s-cooperation-made-it-easy-to-deport-rajiv-saxena-deepak-talwar-1443918-2019-01-31
So this is a 2 way street as far as UAE is concerned, anything is possible and nothing is in the public eye. And people trust this place! Whatever!
Interpol red notices are mostly for harassment and if it is for check bouncing, nothing will happen except harassment. No one can be brought back. People have simply no idea that LLC law of UAE is invalid outside of UAE. Even the lawyers mislead people because they keep making money but most times the lawyers are clueless and keep talking rubbish.
Of course, it does have a lot of risk of extradition but rarely any have happened. Their power is mostly limited within UAE or at most GCC but GCC is falling apart anyways.
Thank you for appreciating the blog and the articles.
Depeg rumors have happened in 2006 and then in 2012 in the past but it is not so easy.
Depeg is not such a simple thing. It impacts every single human being in the world and therefore will happen only as a last resort no matter what anyone says including myself.
However, I believe this year is the highest chance as on date. My guess is 85% chance but depends on Trump, oil, Iran, speed of depleting reserves and so much more.
Else Saudi and UAE both will go completely bankrupt and become empty countries.
2/2...
DeleteTraffic is slow and it's not the traffic but the quality of people. High quality people have been replaced by low quality people so the numbers could be same but our information says that over 1 million have left in the last 1 or 2 years. Low quality people can never afford what 1 high quality person can earn and spend.
Sheikh Khalifa is in the Al Ain Palace under the supervision of a team of doctors led by a renowned British doctor. He is sick but alive ever since he had a stroke back in 2015 circa.
Yes, am aware of the 5% tax.
All taxes are usually paid only by expats. Expats don't even know what all exemptions apply to Emiratis because they are never publicly divulged. And expats wonder why Emiratis don't mix with them! haha
I have known Emiratis for decades and attended weddings etc and call them as dear friends. So I have a different level of insights.
Banks will freeze in GCC and UAE and I see a potential for capital controls once depeg/repeg and oil in yuan occurs.
Salik and taxes are all geared to transfer money from the pockets of expats into the pockets of the Govt in the most efficient manner because both the Govt and expats are bankrupt so there is no easy way around except threaten expats and coerce them else the Govt will go bust. And Govts usually do not go bust, they just plunder their citizens and in the case of UAE, their expats.
I doubt Abu Dhabi is worried about Salik but perhaps they don't see as a major revenue generator which is why it has not implemented Salik in AD yet. Also note, Emirati population is higher in Abu Dhabi.
Just FYI, Abu Dhabi has recently reduced salaries and benefits of all Dubai based Emiratis, tensions run high. Let us see what turn this place called UAE takes next.
Thank you and best wishes,
Very nice reply. I too know a lot about the Emirate exemptions...did you know they have a locale grocery store where Emirates only can go shopping for staple items at unheard of low prices. Mostly for cooking oils, flour, rice, etc...All of the infrastructure has been put in place for AD Salik but it is yet to be activated. However they have been using the infrastructure to monitor vehicles. They say it is security measures but it is to catch unregistered vehicles, or track people who are wanted likely for debt.
DeleteYou said " LLC law of UAE is invalid outside of UAE. Even the lawyers mislead people because they keep making money but most times the lawyers are clueless and keep talking rubbish." What about people with debt that were just personal or car loans, not LLC related. And the lawyers what do you think of companies like debtindubai Radha sterling. I read countless articles of her coming to the rescue in italy, germany, spain, etc of people with small debt. Are these articles fake to drum up business? She claims to be able to settle with banks for 20-30% of the total balance if someone is in default, but I can not see any UAE bank making a deal like this.
I always tend to think that radha sterling is looking for business, I think its detainedindubai though. I believe she is a lawyer, and I believe she represents people but I also think some of the interpol red alert cases she does in Europe are exaggerated or bogus...Either those people have much larger loans than 10k Euro and shes pretending its lower to make even small debt runners pay her fee or they don't exist at all..I just can't see countries like Germany sending anyone to a debtors prison. India would tho, I would stay away from there.
DeleteHello again,
DeleteYes, Emiratis go to Union Cooperative to get their groceries and get a decent discount. But there are 2 things in the last few years. Anyone can go there actually.
1. Competition is so fierce and discounts so heavy that Union Coop is now empty that used to be flush with people even a decade back.
2. We are not sure but they had like 30% discounts for Emiratis but it may have been cut like their medicare and lately their salaries and bonuses as well.
License readers are for catching thefts, traffic fines, security, criminals, debt absconders etc. It's a multi functional gadget almost on every police car since 2012-2013. Now audio and video recordings in almost every cab too. lol
It is very scary but Dubai has one of the finest security systems in the WORLD. People have no idea about triangulation which is now an old tech in Dubai with mobiles and Emirates ID and the physical being. Bad people or unlucky people simply stand no chance in Dubai.
We cannot tell you about the cameras what all they can do. It's better not to say much.
DetainedinDubai of course is a business service but don't take them on economics alone. Radha is a human rights lawyer not a finance lawyer. You seem to presume that she is a bank/finance lawyer.
She has some interesting people backing her up so cannot say much here.
No one can settle nothing with banks. Banks don't listen and try to recover through threats of jail and harassment else sell the file ahead, if the client is unreachable. Govt supports all this with laws, police and immigration etc because majority banks belong to the state anyways.
The real jokers are these people who advise stressed out people at the National Newspaper.
On the one hand, they don't really know how Dubai works because most are few years old in Dubai and on the other hand, they cannot say or do much so they end up with muck on their faces. lol
In one response a few weeks back, they advised the person that why did he take debt?! All 3 of them. LOL
https://www.thenational.ae/business/money/the-debt-panel-i-owe-dh144-000-on-five-credit-cards-after-my-salary-was-slashed-by-20-per-cent-1.846761
No country will send anyone back including India. You need bilateral agreements, there are international laws, embassies and rules of reciprocity. Aside from one or two random people being sent for some odd reasons without due process, almost no one can be sent through legal systems back to ME. It has to be fool proof and documented with courts.
As far as we know no one has been brought back or car loans or personal loans. It's simply not possible to even find people unless they are stupid and go on social media, then the recovery agents go after them. No overseas arrests have appeared in any media or reported by any Govt or police except some random places on social media.
The only real power they have is the threat of jail which is within UAE not outside.
In some cases, banks may even accept something lower but we know people who had 6,000 dirhams outstanding or billions in outstanding who have left and then they are caught because they simply cannot think and end up taking a Emirates plane and next thing they know they are in a Dubai jail. lol
Since about 2016, it is not even possible to leave Dubai if you have lost your job recently or have overdue loans or large business loans. However, we wish everyone the best.
Hope this helps.
Thank you and best wishes.
Thank you what about examples like this though?
Deletehttps://www.telegraph.co.uk/news/worldnews/asia/taiwan/7264827/Briton-to-be-extradited-from-Thailand-to-Dubai.html
This is one of the only ones I can find from a legit newspaper. The rest are articles more like this one which I do not find credible:
http://www.mynewsdesk.com/uk/stirling-och-partners/pressreleases/3rd-british-nationals-arrested-in-3-months-in-europe-on-interpol-notices-issued-by-uae-banks-for-minor-unpaid-credit-card-or-loan-payments-2170258
If in the first article you say its because it was a large amount, then whats to stop a UAE bank from increasing late fees and interest to the point where eventually a loan becomes large enough to warrant extradition from a 3rd party country.
I agree with you on the taxis, I have been saying this for along time to many friends. It makes no sense why a government run taxi company needs a television in the back that only plays advertisements. It is clearly a 'spy' device. I also know many people that got terminated 10 months ago and were stopped at the airport as they tried to leave later that night..This coming June many many abu dhabi teachers are going to be terminated as they have begun replacing them with Indian and Philippine nationals for half the salary. It could get ugly. Termination letters for the Abu Dhabi Government Schools will begin around the end of Ramadan...they have already told the teachers the contracts are changing for next year and they will be expected to pay their own rent now instead of having it as a perk in the contract.
Hello,
DeleteThat Michael who was brought back is an odd ball. Reason it happened because he "cheated" the Ruler of Dubai's company. Thats a big no no. He was sentenced to more than 10 years in jail which may have been extended in 2017.
Similar thing happened to Nakheel CEO in 2008, he left and went back to Australia and then tried to sue them for non payment of gratuity etc. No idea what happened after that. He was smart not to to anything while in UAE.
We know of the Gold.AE company but we cannot discuss it here. It was a multi billion loss. Maybe someone out of thousands who lost their money can comment here.
Thats why we said that there are a few odd cases like that. They are not the norm nor are they fully legal.
But if you do something to any of the Top 10 or Top 20 people, you are done! We know of cases from RAK to AD and in between that we cannot even disclose here.
What happens inside those palaces must remain inside those palaces. Our lips are sealed.
The second article is same. It is not verifiable but there could be an element of truth.
Since 2015, at least half a million people could have run away. Out of that if 5-10 are caught, it is insignificant.
You are looking too deeply into all of it. The TV behind the cab driver seat is not a spy tool. Spy tool is in the front, in the meter dashboard. ;)
Number of job cuts are insane in the teaching sector. Did not know about it. Thanks for sharing.
So many have been asked not to leave at the airport that they should release the list of thousands in papers. :) Best part is that no one is allowed o speak so no one will know because they will go to jail for spreading "negative" news.
Number of expat bankers to be fired will be at least 10,000 within 2019 out of the 7 mergers and the 3 bank merger with an average of 1,000 per bank. Associated jobs in outsourced companies will also be there who have been struggling since 2016.
Malls are deserted, food courts are closing, banks are shutting, it is going to be very UGLY and the Govt knows it.
Why people continue to stay there is beyond belief!
Ignorance is indeed bliss! lol
Because whatever anyone thinks can be the worst for them or their company or their business, it will become 100 times worse than their imagination today.
Anyways, we wish everyone all the best!
Because worse is yet to come!
2 Final things.
Delete1. wouldnt cheating (running on any sized loan) a bank owner automatically be one of the top 10-20 people in UAE?
2. I know a few people that got caught up in the gold scandal. They were told they could purchase gold at small prices from Africa and it would be resold onto the market at the spot price. It started with them receiving payments on time for small amounts until they agreed to invest larger amounts. Typical Ponzi Scheme...One friend lost 250k USD, another 750k USD. A similar scam was started by the exact same people for barrels of oil in nigeria...my friends were promised to buy barrels at the cost of extraction, and to sell it at the market rate, but before they could invest luckily for them the Indian in charge of both the gold and oil scam ran home with only their gold investment money.
Re Teacher:
Last year Abu Dhabi laid off about 1500-2000 teachers, many were GCC expats and many were Westerners. This coming spring is supposed to be majority Westerners. Many that I know personally that had loans left at Christmas as they feared their passports would be flagged come Spring Break which just finished 3 days ago for the teachers. I will post on your blog in the comments in a few weeks when more information comes. As of now all anyone knows is those teachers used to make anywhere from 13-20k AED a month plus 100k housing per year plus flight allowance each year..all the new non western teachers have been given 16000 with a basic of 6300...Many fear a new contract would change their basic from 13-20k to the 6300 and affect all the prior years of service, anyone not resigning this year before the major cuts needs to give their head a shake.
Hello,
DeleteNo, it's not the same. Cheating against banks is not same as personally cheating or crossing the Top 10-20 people. In the Arab world, crossing someone personally is a big NO NO.
Banks are legal entities having their own laws and kind of run independently and serve lots of purposes.
2. That gold scandal could be linked to the other one which was gold trading, FX trading and the infamous Gold ATM's.
But sad to know that people lost so much of their moneys. It's mind blowing!
No one should do any transaction with respect to any investments outside of a bank in the ME because banks have protections even if stocks and mutual funds can go down.
Outside the banks, it is the jungle law and there is no recourse at all including from private advisers, insurance brokers, private companies touting from bitcoin to FX to gold and oil etc.
Very sad to know that thousands of teachers are being asked to leave and be replaced by low paid teachers. It's scary but totally believable that some western teachers would run way before anything more unfortunate happens.
It is going to get a lot more worse in the months ahead.
We are not even 45% done with the crisis in the past 5 odd years which began in Jan 2015.
We wish everyone who is still in the GCC as an expat all the very best. Although we continue to believe that absolutely no one will remain unscathed when all is said and done.
Stay safe!
https://www.arabianbusiness.com/politics-economics/417391-dubai-private-sector-grows-at-fastest-rate-in-nearly-year?utm_source=whatsapp&utm_medium=Social-Share
ReplyDeleteHello,
DeleteThank you for visiting and for the link.
However, such data has been provided by the Govt in 2014, 2015, 2016, 2017, then 2018 and now in 2019. And every single year they have been WRONG.
There is absolutely no value to such data.
If you believe in this data about real estate or GDP, then may God bless and keep you safe.
Thank you and best wishes,
Do you have any numbers for the full year 2018 or Q1 2019 bank loan defaults? I know they released the Q1 2018 and it was if I recall 28 billion in non performing loans.
ReplyDeleteHello,
DeleteFirstly, I don't believe none of the data from them.
Secondly, I don't believe ratings agencies have the guts to collect data from even all the public listed banks and publish it collectively.
Thirdly, majority loans are with local Emiratis and ruler owned companies who cannot be taken to task but shall be after 6 months from today based on what we are hearing.
Plus you can see the loan defaults and lack of liquidity from more than 20 banks across GCC that are "merging" while they claim everything is hunky dory.
If the loan defaults were low, banks wouldn't be toppling over like falling dominoes.
In all, don't have any realistic data which is reliable. They have over USD 36b coming due in bonds from UAE based entities over the next 18 months or so.
That will be a better indicator than any other fake data that they publish along with the toppling banks.
Thank you,
Very scary situation. Worried for the expats and their families. Only a miracle can turn around everything.
ReplyDeleteHello,
DeleteThank you for taking the time to comment and for visiting.
Indeed, it is very scary for ALL expats in UAE with no exception.
Unfortunately, most will be in dire shape and will leave penniless.
Even God or a miracle cannot help the Middle East now. They are on a trajectory that is on an irreversible course while the world continues to evolve every single day at a rapid pace making ME even more irrelevant while they remain frozen in time.
It does not give us any pleasure to write or predict such things but these are the facts and reality affecting millions of lives. Everyone needs to have courage to face it or try to emulate us and predict it years in advance.
We can certainly hope but that's not a good strategy when life savings or jobs of people or stability of families are concerned.
Thank you and best wishes,
Thank you for the insights Manoj and team. What's your view on other gulf countries besides UAE & Saudi. What about Kuwait, specially for expats and opportunities or risks.
ReplyDeleteHello,
DeleteThank you for visiting and for your comment. Appreciate it.
Kuwait is in the doldrums. It will continue to remain weak and slide gradually. Expats have been deported in tens of thousands, laws passed, and now locals don't even want to apply because they know work hours are so long.
Many thousands of Indians from Kerala who were deported by Kuwait have moved to Georgia, for example, because India is not exactly a paradise for those returning after long time.
Govt is in a very tight spot.
Kuwait and Bahrain are just hanging there because of some generosity and bailouts from UAE and Saudi else it would be even more worse.
UAE and Saudi need the votes of these 2 countries. But Oman and Qatar are already gone and more closer to Iran than anyone would publicly admit which is what is keeping them relatively far better. Because almost all Iranian business has moved from Dubai to Qatar and Oman and will never ever return.
80m Iranians need a lot of stuff and almost all was provided by Dubai but now is being provided by Oman and Qatar mostly.
Kuwait's Govt debt level is also high, budget deficits keep rising.
Latest is that expats will need to pay compulsory health insurance, same like in Saudi where they pay dependency fees. Thousands more will leave once it is enforced.
Govt is are cutting all forms of subsidies and for now are taxing expats, but who will they tax when most expats are either laborers or bankrupt?
Don't see much opportunities but they are slightly better than UAE because UAE went too high so the fall will be as high.
Kuwait did not rise as high like UAE or even Qatar so the risks are low but the ongoing issues in Algeria and Sudan are not good, Iraq and Syria and Lebanon are already pro Iran plus Qatar and Oman.
Unfortunately not much good can happen in GCC but Qatar will be the positive odd ball followed by Oman who will navigate well until some real catastrophe, which is not directly economic excluding the repeg/depeg/yuan for oil), happens in the GCC.
Regardless, expats will get decimated in every GCC country including Kuwait. Any benefit will only accrue to locals in every country.
Hope this helps.
Thank you and best wishes.
"We know of the Gold.AE company but we cannot discuss it here. It was a multi billion loss. Maybe someone out of thousands who lost their money can comment here."
ReplyDeleteHi Manoj,
My wife but some money in gold.ae and after some time I told her to sell it all. Which she did. Couple of months later this whole things went bust.
She received letters about this the story is quite shocking. In the letters it was explained that a "Emirate Sultan" replaced the management with 2 crooks which were working for him. They transfered illegally the money from gold.ae to his company accounts. And gone was the money of investors.
They also said that DIFC and uae regulations are a big joke unless they put the Emirati (Royal family) in jail and make an example of him for stealing investors money.
Greetings, S.A.
Hello dear SA,
DeleteTotally agree. any law in UAE and across GCC is a joke. It is only meant to protect the locals and they always get pardoned for everything including murder.
Pardons for financial crimes is completely normal for the locals. However, things are so bad now that we believe that banks are totally sinking and over the last 2-3 years, many locals have defaulted who have been given extensions time and again but with the banks collapsing, they will need to go harsh on locals too which is why locals have also started fleeing from UAE. Need another 6 months for this one to play out.
The Gold company was from AD and the Egyptian CEO filed 3 court cases against the "Emirate Sultan" in DIFC and thrice the case was rejected by DIFC English judges because a case against the ruling family members is not allowed.
Before that, obviously the Egyptian CEO had fled UAE else he would be in some dark cell somewhere.
As we say, it is lucky for those who have escaped or left UAE.
You are fortunate that you are clued on and asked your wife to pull out of the scam. Happy for you that you both didn't lose anything.
We can just pray that whoever is smart will leave voluntarily because those who will stay will be sent back penniless and involuntarily.
Thank you and best wishes,