The Central Bank has reduced the definition of a non-performing loan to any loan where payment is more than 90 days overdue. This is not something to be celebrated.
First, I do not understand how the previous definition was ever accepted, whereby non-payment for 180 days, or six months, was considered non-performing. The current reduction, although an improvement, still falls far short of the mark.
If someone does not pay me within a week, I know there is a problem. If they have not paid me within a month, I know this is a serious problem.
This is true of most, if not all, businesses that I know of. Telecommunications companies will cut phone and internet services if you are a month late. Insurance companies will void your insurance if you are more than a month late on paying your premium.
Even your bank will block your credit card if you are more than a month late paying your minimum.
So why are bank debtors so special? How come bank depositors get to be late 90 days before banks consider them non-performing? Mainly, it is because once a loan is classified as non-performing, then the bank must register it as a loss on its books.
I wish it ended there. You see, the Central Bank could reduce the time period to one day for a non-paying account to be considered non-performing, but this will not stop the banks.
There is a well known, and easy way around this: imagine you have borrowed Dh100,000 (US$27,225) for one year at an interest rate of 10 per cent. In one year you need to pay Dh110,000 to the bank, but you are short of funds, and you can pay only Dh60,000.
What can the bank do? If you pay only the reduced amount, then the bank will have to write off the remaining Dh50,000, which is considered a loss. If there is a loss, the branch manager does not get a bonus.
So the branch manager comes to you and says, why don't you put your Dh60,000 in a fixed deposit, take a loan of Dh110,000 against the fixed deposit, and then payoff the first loan?
Sure, in one year maybe you'll default on the new loan, but what does the branch manager care, he'll have moved on.
The example I give above is usually called a technical default, but it is extremely hard to catch as it is quite usual for people and companies to reschedule their loans. But it does illustrate how regulations alone cannot make the banking system safe.
In fact, regulations incentivise banks to behave in a more risky manner.
For example, it is normal to have to make provision for 100 per cent of the principal and interest of a loan if legal action is initiated by the bank to recover any monies. The bank is therefore incentivised to delay any legal action in recovering its money.
I am not trying to blame the regulations here; I am merely pointing out that the system is inherently adversarial, and that regulations alone are useless. A strong and active Central Bank is a necessary component. This is important if the UAE's banking system is to return to health.
One thing to investigate is the mystery of the disappearing Dh180 billion. Back in the summer of 2007, as the markets were skyrocketing, we saw interest rates on dirham deposits mysteriously drop to zero.
The reason for this, we were told, was that foreign hedge funds were betting that the Government would have to allow the dirham to appreciate. Consequently these hedge funds began to sell dollars, and buy dirhams.
With all these new dirhams floating around, banks reduced their interest rates on dirham deposits. Then last year, at the height of the global financial crisis as banks nearly collapsed, we were told that this was due to the hedge funds withdrawing this Dh180bn, creating a liquidity squeeze. Although this all sounds plausible, and was widely reported, it is completely incorrect.
Currency cannot normally just appear. It also cannot normally disappear. If a hedge fund goes to a bank, sells dollars to the bank and buys dirhams for it, then the total change of dirhams in the banking system is zero.
Assume the hedge fund bought Dh100 million. True, this would increase the number of dirhams in the system. But there is an offsetting entry from the sale of Dh100m by the bank to the hedge fund. This decreases the total amount of dirhams in the banking system.
The net effect, however, is that there is absolutely no movement in the total amount of dirhams in the system. The only way dirhams can be added or subtracted from the system is by the Government. So it was not hedge funds that caused interest rates to drop to zero, it was more likely banker greed.
And it was not hedge funds that created a liquidity crunch, that was more likely risk mismanagement by the banks.
To finish our analysis of the banking system, let us look at this liquidity crunch. For this, we need to agree a measure of liquidity for the banks.
I will use the ratio of gross loans to customer deposits, simply because these were the ones most readily available from the information provider I use.
Looking at the commercial banks listed on the Abu Dhabi Securities Exchange, this increased dramatically from 2006, when the ratio was a conservative 99 per cent, to 102 per cent in 2007 and 112 per cent in 2008.
The banks gave out more loans than they had deposits, increasing loans by about 13 per cent more than deposits over this three-year period. The picture for commercial banks listed on the Dubai Financial Market is uglier: rising from a respectable 91 per cent in 2006, to 110 per cent in 2007, up to an astounding 126 per cent in 2008. These banks effectively gave out 35 per cent more in loans than they brought in deposits during this three-year period.
For the bankers out there who will try to nitpick, saying that this ratio is not an accurate measure of liquidity, I would like to remind them that it remains a good indicator of the fact that the banks lent out far more than they raised in deposits.
There is a lot going on with the banks, and new regulations are not going to do much. On Monday, I randomly picked up the financials for two banks. The first had lent its directors and related parties Dh2.5 billion. The other lent its directors and related parties Dh3.6bn. Maybe a law banning related party transactions is in order. With 52 operating banks in the UAE, there are plenty to choose from.
Dr al Sabah is a principal and the chief investment officer of Saffar. He also serves as a director of the board of Saffar Holdings; is the chairman of ABQ Zawya; and is a director of the board and a member of the audit committee of Credit Suisse Saudi Arabia; he is a director of the board of Al Awael International Securities; and a director of the board of Ali Zaid Al Quraishi and Brothers.
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WORLD CUP SEMI-FINALS
England v New Zealand (Saturday, 12pm)
Wales v South Africa (Sunday, 1pm)
Test squad: Azhar Ali (captain), Abid Ali, Asad Shafiq, Babar Azam, Haris Sohail, Imam-ul-Haq, Imran Khan, Iftikhar Ahmed, Kashif Bhatti, Mohammad Abbas, Mohammad Rizwan(wicketkeeper), Musa Khan, Naseem Shah, Shaheen Afridi, Shan Masood, Yasir Shah
Twenty20 squad: Babar Azam (captain), Asif Ali, Fakhar Zaman, Haris Sohail, Iftikhar Ahmed, Imad Wasim, Imam-ul-Haq, Khushdil Shah, Mohammad Amir, Mohammad Hasnain, Mohammad Irfan, Mohammad Rizwan (wicketkeeper), Musa Khan, Shadab Khan, Usman Qadir, Wahab Riaz
Company%20profile
%3Cp%3EName%3A%20Tabby%3Cbr%3EFounded%3A%20August%202019%3B%20platform%20went%20live%20in%20February%202020%3Cbr%3EFounder%2FCEO%3A%20Hosam%20Arab%2C%20co-founder%3A%20Daniil%20Barkalov%3Cbr%3EBased%3A%20Dubai%2C%20UAE%3Cbr%3ESector%3A%20Payments%3Cbr%3ESize%3A%2040-50%20employees%3Cbr%3EStage%3A%20Series%20A%3Cbr%3EInvestors%3A%20Arbor%20Ventures%2C%20Mubadala%20Capital%2C%20Wamda%20Capital%2C%20STV%2C%20Raed%20Ventures%2C%20Global%20Founders%20Capital%2C%20JIMCO%2C%20Global%20Ventures%2C%20Venture%20Souq%2C%20Outliers%20VC%2C%20MSA%20Capital%2C%20HOF%20and%20AB%20Accelerator.%3Cbr%3E%3C%2Fp%3E%0A
Company Profile
Company name: Fine Diner
Started: March, 2020
Co-founders: Sami Elayan, Saed Elayan and Zaid Azzouka
Based: Dubai
Industry: Technology and food delivery
Initial investment: Dh75,000
Investor: Dtec Startupbootcamp
Future plan: Looking to raise $400,000
Total sales: Over 1,000 deliveries in three months
What is blockchain?
Blockchain is a form of distributed ledger technology, a digital system in which data is recorded across multiple places at the same time. Unlike traditional databases, DLTs have no central administrator or centralised data storage. They are transparent because the data is visible and, because they are automatically replicated and impossible to be tampered with, they are secure.
The main difference between blockchain and other forms of DLT is the way data is stored as ‘blocks’ – new transactions are added to the existing ‘chain’ of past transactions, hence the name ‘blockchain’. It is impossible to delete or modify information on the chain due to the replication of blocks across various locations.
Blockchain is mostly associated with cryptocurrency Bitcoin. Due to the inability to tamper with transactions, advocates say this makes the currency more secure and safer than traditional systems. It is maintained by a network of people referred to as ‘miners’, who receive rewards for solving complex mathematical equations that enable transactions to go through.
However, one of the major problems that has come to light has been the presence of illicit material buried in the Bitcoin blockchain, linking it to the dark web.
Other blockchain platforms can offer things like smart contracts, which are automatically implemented when specific conditions from all interested parties are reached, cutting the time involved and the risk of mistakes. Another use could be storing medical records, as patients can be confident their information cannot be changed. The technology can also be used in supply chains, voting and has the potential to used for storing property records.
What the law says
Micro-retirement is not a recognised concept or employment status under Federal Decree Law No. 33 of 2021 on the Regulation of Labour Relations (as amended) (UAE Labour Law). As such, it reflects a voluntary work-life balance practice, rather than a recognised legal employment category, according to Dilini Loku, senior associate for law firm Gateley Middle East.
“Some companies may offer formal sabbatical policies or career break programmes; however, beyond such arrangements, there is no automatic right or statutory entitlement to extended breaks,” she explains.
“Any leave taken beyond statutory entitlements, such as annual leave, is typically regarded as unpaid leave in accordance with Article 33 of the UAE Labour Law. While employees may legally take unpaid leave, such requests are subject to the employer’s discretion and require approval.”
If an employee resigns to pursue micro-retirement, the employment contract is terminated, and the employer is under no legal obligation to rehire the employee in the future unless specific contractual agreements are in place (such as return-to-work arrangements), which are generally uncommon, Ms Loku adds.
THE CLOWN OF GAZA
Director: Abdulrahman Sabbah
Starring: Alaa Meqdad
Rating: 4/5
The biog:
Languages: Arabic, Farsi, Hindi, basic Russian
Favourite food: Pizza
Best food on the road: rice
Favourite colour: silver
Favourite bike: Gold Wing, Honda
Favourite biking destination: Canada
The specs
Engine 60kwh FWD
Battery Rimac 120kwh Lithium Nickel Manganese Cobalt Oxide (LiNiMnCoO2) chemistry
Power 204hp Torque 360Nm
Price, base / as tested Dh174,500
PROFILE OF HALAN
Started: November 2017
Founders: Mounir Nakhla, Ahmed Mohsen and Mohamed Aboulnaga
Based: Cairo, Egypt
Sector: transport and logistics
Size: 150 employees
Investment: approximately $8 million
Investors include: Singapore’s Battery Road Digital Holdings, Egypt’s Algebra Ventures, Uber co-founder and former CTO Oscar Salazar
Indian origin executives leading top technology firms
Sundar Pichai
Chief executive, Google and Alphabet
Satya Nadella
Chief executive, Microsoft
Ajaypal Singh Banga
President and chief executive, Mastercard
Shantanu Narayen
Chief executive, chairman, and president, Adobe
Indra Nooyi
Board of directors, Amazon and former chief executive, PepsiCo
WISH
%3Cp%3E%3Cstrong%3EDirectors%3A%3C%2Fstrong%3E%20Chris%20Buck%2C%20Fawn%20Veerasunthorn%3Cbr%3E%3Cstrong%3EStars%3A%3C%2Fstrong%3E%20Ariana%20DeBose%2C%20Chris%20Pine%2C%20Alan%20Tudyk%3Cbr%3E%3Cstrong%3ERating%3A%3C%2Fstrong%3E%203.5%2F5%3C%2Fp%3E%0A
How much do leading UAE’s UK curriculum schools charge for Year 6?
- Nord Anglia International School (Dubai) – Dh85,032
- Kings School Al Barsha (Dubai) – Dh71,905
- Brighton College Abu Dhabi - Dh68,560
- Jumeirah English Speaking School (Dubai) – Dh59,728
- Gems Wellington International School – Dubai Branch – Dh58,488
- The British School Al Khubairat (Abu Dhabi) - Dh54,170
- Dubai English Speaking School – Dh51,269
*Annual tuition fees covering the 2024/2025 academic year
MATCH INFO
Manchester City 0
Wolves 2 (Traore 80', 90 4')
Company Profile
Name: Thndr
Started: 2019
Co-founders: Ahmad Hammouda and Seif Amr
Sector: FinTech
Headquarters: Egypt
UAE base: Hub71, Abu Dhabi
Current number of staff: More than 150
Funds raised: $22 million
Lampedusa: Gateway to Europe
Pietro Bartolo and Lidia Tilotta
Quercus
If%20you%20go
%3Cp%3EThere%20are%20regular%20flights%20from%20Dubai%20to%20Kathmandu.%20Fares%20with%20Air%20Arabia%20and%20flydubai%20start%20at%20Dh1%2C265.%3Cbr%3EIn%20Kathmandu%2C%20rooms%20at%20the%20Oasis%20Kathmandu%20Hotel%20start%20at%20Dh195%20and%20Dh120%20at%20Hotel%20Ganesh%20Himal.%3Cbr%3EThird%20Rock%20Adventures%20offers%20professionally%20run%20group%20and%20individual%20treks%20and%20tours%20using%20highly%20experienced%20guides%20throughout%20Nepal%2C%20Bhutan%20and%20other%20parts%20of%20the%20Himalayas.%3C%2Fp%3E%0A
The specs
Engine: 1.5-litre turbo
Power: 181hp
Torque: 230Nm
Transmission: 6-speed automatic
Starting price: Dh79,000
On sale: Now
Brief scoreline:
Al Wahda 2
Al Menhali 27', Tagliabue 79'
Al Nassr 3
Hamdallah 41', Giuliano 45 1', 62'
The%20specs
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How to wear a kandura
Dos
- Wear the right fabric for the right season and occasion
- Always ask for the dress code if you don’t know
- Wear a white kandura, white ghutra / shemagh (headwear) and black shoes for work
- Wear 100 per cent cotton under the kandura as most fabrics are polyester
Don’ts
- Wear hamdania for work, always wear a ghutra and agal
- Buy a kandura only based on how it feels; ask questions about the fabric and understand what you are buying
The more serious side of specialty coffee
While the taste of beans and freshness of roast is paramount to the specialty coffee scene, so is sustainability and workers’ rights.
The bulk of genuine specialty coffee companies aim to improve on these elements in every stage of production via direct relationships with farmers. For instance, Mokha 1450 on Al Wasl Road strives to work predominantly with women-owned and -operated coffee organisations, including female farmers in the Sabree mountains of Yemen.
Because, as the boutique’s owner, Garfield Kerr, points out: “women represent over 90 per cent of the coffee value chain, but are woefully underrepresented in less than 10 per cent of ownership and management throughout the global coffee industry.”
One of the UAE’s largest suppliers of green (meaning not-yet-roasted) beans, Raw Coffee, is a founding member of the Partnership of Gender Equity, which aims to empower female coffee farmers and harvesters.
Also, globally, many companies have found the perfect way to recycle old coffee grounds: they create the perfect fertile soil in which to grow mushrooms.
Specs
Engine: Dual-motor all-wheel-drive electric
Range: Up to 610km
Power: 905hp
Torque: 985Nm
Price: From Dh439,000
Available: Now
The specs
AT4 Ultimate, as tested
Engine: 6.2-litre V8
Power: 420hp
Torque: 623Nm
Transmission: 10-speed automatic
Price: From Dh330,800 (Elevation: Dh236,400; AT4: Dh286,800; Denali: Dh345,800)
On sale: Now
More on Quran memorisation:
More from Rashmee Roshan Lall
Abu Dhabi Sustainability Week
More from our neighbourhood series:
The biog
Favourite colour: Brown
Favourite Movie: Resident Evil
Hobbies: Painting, Cooking, Imitating Voices
Favourite food: Pizza
Trivia: Was the voice of three characters in the Emirati animation, Shaabiyat Al Cartoon
Married Malala
Malala Yousafzai is enjoying married life, her father said.
The 24-year-old married Pakistan cricket executive Asser Malik last year in a small ceremony in the UK.
Ziauddin Yousafzai told The National his daughter was ‘very happy’ with her husband.
The specs
Engine: 4.0-litre V8 twin-turbocharged and three electric motors
Power: Combined output 920hp
Torque: 730Nm at 4,000-7,000rpm
Transmission: 8-speed dual-clutch automatic
Fuel consumption: 11.2L/100km
On sale: Now, deliveries expected later in 2025
Price: expected to start at Dh1,432,000
UAE currency: the story behind the money in your pockets
BAD%20BOYS%3A%20RIDE%20OR%20DIE
%3Cp%3E%3Cstrong%3EDirector%3A%3C%2Fstrong%3E%20Adil%20El%20Arbi%20and%20Bilall%20Fallah%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EStarring%3A%20%3C%2Fstrong%3EWill%20Smith%2C%20Martin%20Lawrence%2C%20Joe%20Pantoliano%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3ERating%3A%3C%2Fstrong%3E%203.5%2F5%3C%2Fp%3E%0A
COMPANY%20PROFILE
%3Cp%3E%3Cstrong%3ECompany%20name%3A%3C%2Fstrong%3E%20Alaan%3Cbr%3E%3Cstrong%3EStarted%3A%3C%2Fstrong%3E%202021%3Cbr%3E%3Cstrong%3EBased%3A%3C%2Fstrong%3E%20Dubai%3Cbr%3E%3Cstrong%3EFounders%3A%3C%2Fstrong%3E%20Parthi%20Duraisamy%20and%20Karun%20Kurien%3Cbr%3E%3Cstrong%3ESector%3A%3C%2Fstrong%3E%20FinTech%3Cbr%3E%3Cstrong%3EInvestment%20stage%3A%3C%2Fstrong%3E%20%247%20million%20raised%20in%20total%20%E2%80%94%20%242.5%20million%20in%20a%20seed%20round%20and%20%244.5%20million%20in%20a%20pre-series%20A%20round%3Cbr%3E%3Cbr%3E%3C%2Fp%3E%0A
WHAT%20IS%20'JUICE%20JACKING'%3F
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PROFILE
Name: Enhance Fitness
Year started: 2018
Based: UAE
Employees: 200
Amount raised: $3m
Investors: Global Ventures and angel investors
ENGLAND SQUAD
Joe Root (c), Moeen Ali, Jimmy Anderson, Jonny Bairstow, Stuart Broad, Jos Buttler, Alastair Cook, Sam Curran, Keaton Jennings, Ollie Pope, Adil Rashid, Ben Stokes, James Vince, Chris Woakes
Breaking News: The Remaking of Journalism and Why It Matters Now
Alan Rushbridger, Canongate
