Wednesday, Jan 14, 2009
You don't say!?
The National: Moody's says outlook of UAE banks 'negative'
Did you know that HSBC in teh UAE don't have a debit card facility? Yep, that means everyone buys everything on credit. Oh, and cars are pretty much all on credit too (and some banks are kind enough to offer "rent loans" so you can afford your overpriced one bed). I would say that the amount of money borrowed against cars, on credit cards and as mortgages on property is mind-blowing.
Posted by brickormortis @ 04:35 PM (195 views) Add Comment
2 Comments
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1. Mzzpatzey said...
I have a debit card from HSBC Dubai so not quite true.
2. Flackster said...
I live in Dubai, and the banks here will be going down in flames spectacularly. The housing bubble here was massive, for 3 years real estate was the only business in town and the whole place was mortgaged up to the eyeballs. The number of BTL loons with 20 or 30 properties all leveraged can only be guessed at. It popped about 3 months ago, and since then prices in some places have falled 50% already.
The local banks will be absolutely spanked. Most of the population is expats, so they will just run when their BTL dream crumbles. The banks will be left carrying the can. Recently HSBC called me to offer me a deposit for 12 months at 6.1% for the local currency (which is pegged to the dollar). With the same bank I can get only 2% on my USD. That suggests to me a MASSIVE chance of a currency devaluation in the next year.
Think about the UK economic problems after the UK bubble collapsed. Then think how it would be if construction was 40% of the economy instead of 5%, and how far things could fall if annual price rises were 80% instead of 15%.
We are talking total and utter meltdown.