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An Abu Dhabi Islamic Bank report on ‘GCC Banking Competitiveness’ said the UAE remains the most competitive banking market in the Gulf region. The findings revealed country’s 51 banks serve a population of around 8 million with more than 840 branches and over 4,000ATMs. The report noted that despite delivering high levels of service, the banks suffer from lower profitability compared to its GCC counterparts. The UAE banks’ net interest margin remains the lowest among the GCC, at an average of 2.9%, while that of Saudi, Qatari and Kuwaiti banks enjoy rates of 3.5%, 3.4% and 3.2% respectively.

Nakheel has announced plans to start construction on the Palm Jumeirah artificial island which will include fountains, a marina, a public walk and shops. The Dubai’s biggest developer, which received a government bailout of $8.6 billion in 2009, is now in talks with banks to borrow around AED300m ($82m) for the project which is estimated to be completed in 18 months. The developer has not announced any plans on Palm Jebel Ali, Palm Deira islands and The World, a chain of world map-shaped islands.

Etihad Airways has struck a deal with Abu Dhabi’s Mubadala-owned companies to finance its 23 spare engines in a sale and lease-back deal estimated at $367 million. The project includes five GE90 and six Rolls Royce Trent 500 engines which will be bought by Sanad Aero Solutions and Engine Lease Finance Corp (ELF) respectively and leased to the UAE’s flag carrier. Both transactions are on a ten-year operating lease term. These transactions provide the airline with a long-term financing solution for its entire spare engine fleet while mitigating residual value risk and providing competitive cost of ownership over the long term, James Hogan, president and CEO of Etihad Airways, said in an email statement.

Hong Kong and Shanghai Banking Corporation (HSBC) expressed hopes Dubai would be able to meet its upcoming 2012 debt obligations. It also expected that the eurozone crisis would not have an impact on the international banks’ refinancing options extended to the emirate to meet up its liabilities. According to a Moody’s 2011 report, Dubai government-related entities have bonds worth $3.8 billion maturing this year. “We’re not concerned with regards to Dubai’s ability to meet its debt obligations, that’s not only in the medium term but certainly in the context of this year. There is sufficient liquidity and sufficient ways at the borrowers’ disposal to get things done. International banks are still here and will continue to support Dubai Inc,” Paul Skelton, regional co-head of global banking, Middle East North Africa, at HSBC told Reuters in an interview.

Meanwhile, Bloomberg reported that instead of repaying, UAE banks may opt to refinance more than $3 billion of bonds due this year in case pricing remains at current levels in a bid to extend the average debt maturity. The report said UAE banks have around $3.49 billion bonds and sukuk maturing in 2012, with most of the debts held by Emirates NBD, National Bank of Abu Dhabi and Abu Dhabi Commercial Bank. $3 billion is a lot to be falling due at any one time, but recent sukuk issues suggest that deals can be done at the right price even in the current difficult international environment, Raj Madha, an analyst at Rasmala Investment Bank in Dubai, said while adding that banks may prefer rolling over their debts to extend maturities even if they have money to repay it.

The Federal Water and Electricity Authority (FEWA) has announced the completion of two large water reservoirs, each with 5 million gallon capacity water tanks built at a total cost of AED21 million, in the Ras Al Khaimah emirate. The competition comes a month after the opening of a new 15 million gallons desalination plant in Ras Al Khaimah. Two other large reservoirs with a capacity of 10 million gallons each are also being constructed in the emirate, Mohammad Mohammed Saleh, director general FEWA said in a statement.

Libyan Foreign Minister Ashour bin Khayal said his country will strengthen cooperation with the UAE and learn lessons and benefi from its successful experiences and experiments in various fields while pursuing the renaissance of the new post-Gaddafi state. The top diplomat made the pledge while meeting with Sultan Rashid Al Kitoub, UAE’s ambassador to Libya in Tripoli. Libyan government has announced it will spend $8 billion to help integrate former rebels into civilian life by funding welfare projects and lending micro-credit loans to start small businesses. Mustafa Al Sagizli, warriors Affairs committee head, said the interim administration expects more than 200,000 fighters will sign up for the rehabilitation programmes.

(By Moign Khawaja – Editor: Arabian Gazette)

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