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Fifth of UAE banks' assets in property

The National
Total bank exposure to the property market stood at Dh232 billion, the Central Bank said in a report released yesterday. Christopher Pike / The National

Total bank exposure to the property market stood at Dh232 billion, the Central Bank said in a report released yesterday. Christopher Pike / The National


Total bank exposure to the property market stood at Dh232 billion (US$63.16bn), the Central Bank said in a report released yesterday.



The net amount represents 21.5 per cent of banks' deposit base and 21.3 per cent of their total net loans and advances.

The Central Bank examined the impact of the property boom and bust on the banking system in its Financial Stability report.

Like the US savings and loans crisis in the 1980s, the property crash in Japan and Sweden in the 1990s and the more recent western sub-prime crisis, the UAE's property downturn hurt banks' balance sheets. "As we have learnt from other countries' experiences, real estate booms and busts can have far-reaching consequences for a country's banking system, the Central Bank report said.

"The UAE real estate market witnessed a similar pattern, a boom during the years 2005 to 2007 followed by a bust in 2008."



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