Abu Dhabi: Abu Dhabi Commercial Bank, the UAE's third-biggest bank by assets, aims to diversify lending after being hurt by Dubai World's $24.9 billion (Dh91.4 billion) debt-restructuring, its CEO said.
The lesson "for all banks is sticking to certain diversified thresholds no matter how great the borrower is," Ala'a Eraiqat said in an interview in London yesterday. "We learned from the lack of diversification or large concentration."
State-controlled Abu Dhabi Commercial Bank is one of the biggest lenders to holding company Dubai World, which announced plans to restructure its debt. "We were hit harder than everybody else," Eraiqat said.
ADCB is also a lender to Saudi Arabia's Sa'ad and Algosaibi business groups, which defaulted on at least $15.7 billion of loans last year. "Another high concentration was Sa'ad and Algosaibi, that hit us hard."
Fancy schemes
ADCB plans to focus on its core UAE business after cleaning up its balance sheet from years of "fancy investment schemes" and bad loans to financially-troubled business conglomerates, the lender's chief executive said yesterday.
"We will not indulge in any fancy investment schemes as we have in the past," Eraiqat told Zawya Dow Jones in an interview on the sidelines of an investment forum in London. "We will not repeat the same mistakes." In recent years ADCB has lost large amounts of money on investments via various derivative instruments.
Eraiqat said the bank has undertaken "a major clean-up" of its balance sheet but declined to comment on whether it would take more provisions or impairment charges this year.
ADCB will focus on retail, small and medium enterprises, corporate, commercial, and treasury business in its core market of Abu Dhabi and the broader UAE, and doesn't plan to grow through acquisitions right now, Eraiqat said.
"We're not planning any non-organic growth," he said.
