A faltering economy after the siege of Qatar and the war of Yemen … The United Arab Emirates on the brink of bankruptcy!
In the past few years, the UAE has been hit by a violent economic crisis, with Voice of Market website unveiling the first ever case in the UAE and the Middle East for the bankruptcy of Bank of Sharjah.
According to the Voice of Market website “On a quiet Friday night of 12-14, when everyone in the Middle East was enjoying the weekend, the first bank in the UAE reached the breaking point, as we expected and warned everyone for years” the website said.
“The Bank of Sharjah Investment Bank has reached the critical breaking point with liquidity, capital, profits and huge loan losses, and it was necessary to save it on Friday afternoon, December 14, 2018!”.
“As the government of Sharjah holds the majority stake, the previous public shareholders (65%) will be eliminated, and current shareholders in the UAE, such as Al Masoqi, Al Hosani and two private companies, will lose their ability and money”, Voice of Market said.
The recent banking mergers in the Middle East are not a sign of strength or integration, pointing out that these mergers occurs in secrecy with the intention to conceal the rapidly escalating losses, with the lack of liquidity, which makes Middle Eastern banks less secure Banks than anywhere else in the world.
Emirates 71 website for its part, announced that the Central Bank of UAE will support the Sharjah Investment Bank after it has been bankrupt and the capital has fallen in stock market.
The UAE website says that the investment bank in Sharjah has been hit by high levels of bad loans recently, partly because of its exposure to the struggling real estate and construction markets.
Hundreds of bankers will be laid off as the bailout begins and more bank mergers are expected in the next few months.
The Voice of Market publication continues that it is currently not possible to know how bad the problems are, however we can proudly claim that we have reached the moment of “pain” that we have been predicting since 2015 with respect to banks in the Middle East.
This is just the beginning of a massacre in the banking sector in the Middle East where there is no liquidity at all in the markets and less so we will see the number of companies that collapsed in the past few weeks and will not respond anything to these banks.
Such losses have occurred since 2015, and the damage has been so severe that multiple bank mergers are occurring now, and the bank’s first bailout has now taken place.
More are not yet to come. Two banks have a Qatari stake, one of which is United Arab Bank, where we expect merger operations to take place over the past two years.
However, due to the embargo and the crisis with Qatar, integration cannot take place anymore, which has accelerated the crisis and this external stimulus has led to the first bank bailout in the Middle East.
At the same time, several major markets in Dubai collapsed, according to Voice of Market, and one of them appeared in the media because it case could not be swept under the rug.
More than 20 supermarkets were shut down in Manama in Bahrain, while business owners fled the UAE after 40 years of work there, with losses estimated at around 500 million dirhams.
Landmark Group dismiss more than 20 managers last week and suffered retail losses while shutting down restaurants such as Mango Tree, Rivington Grill, Carluccio and others.
Al Sabha Group has not paid salaries for two months because more than 200 employees looted their offices.
The 20-year-old Spinneys store in Bur Dubai will be closed, and many stores will be closed at Yas Mall in Abu Dhabi and across all shopping malls in the UAE.
The flagship store in Chalhoub will be closed at City Walk, which opened less than two years ago.
Within two months, some 200 employees have been laid off.
Bayer Pharma has released 80% of its managers in Dubai.
The real estate sector and all asset prices are sinking as is the stock market.
The Dubai Financial Market has been the worst in the world over the past five years, falling more than 50%.
In such a rapid downward spiral scenario where banks, schools, supermarkets, airlines, retailers, etc… are closed on a weekly basis and paid jobs at banks, pharmaceutical companies, real estate developers, retail stores and thousands more are sold on a monthly basis, so works or employees won’t survive for a long time in such exciting economic conditions, the website said.
Economists say that the siege of Qatar, which caused billions of dollars in money out of Dubai as well as the participation of the UAE in the Saudi alliance in the war in Yemen, which contributed significantly to the depletion of state resources, as well as the fear of investors and businessmen to enter into partnerships and alliances in the tumbling market of United Arab Emirates.
