Dubai's commercial bank has minor DW exposure

Commercial Bank of Dubai, the emirate's fourth largest lender by market capitalisation, has insignificant exposure to indebted Dubai World, the bank's chief executive officer said on Tuesday.

"It is very immaterial compared to our total balance sheet," Peter Batussen told reporters at a signing ceremony between the bank and the Arab Trade Financing program for a $20 million credit line.

Batussen declined to elaborate further. He said the bank has not used any funding made available to national lenders by the United Arab Emirates central bank.

"We never had any liquidity issues that some other banks had," he said.

"We are not dependent on foreign depositors. Our deposit base is very much founded in the UAE."

Of the UAE banks, only National Bank of Abu Dhabi has officially stated what it's exposure to two Dubai World entities currently undergoing a debt restructuring is, $345m.

Dubai sent shockwaves through global markets last month when it asked for a repayment freeze on debt issued by two of its key developers. The government said on Monday it was not responsible for the debts of a flagship conglomerate, Dubai World.

No Dubai-based bank has yet disclosed its exposure to the indebted holding company or its various unit, linked to the emirate's government, but analysts expect local banks to be carrying the bulk of the exposures.

On December 3, Egypt-based investment bank EFG Hermes downgraded four Gulf bank stocks, and said Emirates NBD and Abu Dhabi Commercial Bank have the highest exposure to Dubai public lending.

As a result, the cost of funding and impairment charges for UAE banks are expected to rise.