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UAE banks safe from US setback

The historic credit downgrading of the United States, the world’s largest economy, will have no impact on UAE banks as they have no investment in US securities, according to Hammam Al Shamma, an adviser at the Abu Dhabi-based Al Fajr Securities, one of the UAE’s largest stocks and investment services firms.

It was responding to queries over whether Standard and Poor’s decision to downgrade the US credit rating to AA+ from the top triple-A mark would inflict any losses on the UAE’s banks, which control the largest assets in the Arab region.

“According to available information so far, UAE banks do not possess any investments in US securities…this means that the country’s banking sector is not vulnerable to direct risks from the recent US developments,” he said. “I believe an indirect impact will be three key fields – oil prices, issuance of new bonds and a decline in the US dollar.”

Central Bank figures show UAE banks’ investment in securities abroad stood at around Dh54.2bn at the end of May, nearly a fifth of the banks’ total foreign assets of about Dh270bn. They also accounted for just 3.2 pr cent of the banks’ overall assets of Dh1,703bn at the end of May.

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