Opportunities open up for UAE banks in turbulent times

Dubai: The liquidity crunch could present opportunities for UAE banks who seem to be emerging relatively unscathed from the crisis, KPMG said on Tuesday.

On Monday, UAE Central Bank Governor Sultan Bin Nasser Al Suwaidi said the country's banks have used only 15 per cent of the Dh50 billion emergency funding made available to them last month to cope with the shortage of funds in the interbank market

"I think it's definitely a good number in per cent [15 per cent] however it might be possible that some banks are still in the process of waiting and seeing if they should apply for those sources of funding," he said.

"This region is very lucky that they haven't been that affected by the financial crisis. They have great support from the government, the region overall hasn't been as badly hit as the US and Europe, yes it's a turbulent time but it also brings opportunities," said financial risk management partner at KPMG in the UAE, Joanna Declercq Zelechowska.

According to her, UAE and GCC banks in general were "less international" with a greater focus on the local market which made them a little less vulnerable to the crisis.

"GCC banks are less international. They have been really focusing on the local market predominantly and they have not been participating in those kinds of deals which their foreign counterparts have," she said.

"So they didn't encourage so many of the risky products which caused the crisis. They didn't have such exposure," she said.

"Clearly the focus of local banks is the local market and that's what protects them. And there is a lot of capital, so again they are much more independent," she said.

According to reports, the Bank of England yesterday released a study estimating the losses sustained by financial institutions at £1.8 trillion (Dh10.4 trillion) since the credit crunch.

Governments across the globe spending around £750 billion thus far in rescuing banks.

According to Zelechowska this was a time in which it was important to look for opportunities while being aware of the risks associated with them.

"In turbulent times there will be winners and there will be losers and where there are losers they sort of give up part of the market share and that's where the opportunities lie, this is where you can move in and get the market share," she said.

It remained imperative, however, to first manage the possible risks and vulnerabilities faced by banks including concentration and of course, liquidity, she added.