Singapore’s DBS Group Holdings, Southeast Asia’s largest bank, said it has US$400 million of outstanding loans in troubled Dubai World, a potential loss it called “manageable.”
DBS said it has lent a total of US$1.3 billion to Dubai-owned companies, while the credit to a finance arm of Dubai World represents 0.2 percent of the bank’s balance sheet.
“The bank believes that the situation is manageable as a substantial portion of this is to Dubai-owned companies operating in Asia that are sound,” such as Labroy and South Beach, the bank said in a statement on its Web site.
South Beach is a prime commercial and residential joint venture in Singapore’s convention district, while Labroy Marine is a local shipyard.
Dubai World, the city-state’s main development conglomerate, said last week it is seeking a six-month reprieve on paying its US$60 billion debt. The announcement sent shockwaves around the world on Thursday and Friday as investors feared a possible default by Dubai and its state-owned businesses, which together owe an estimated US$80 billion.
Stock markets in the United Arab Emirates plunged for a second day yesterday. The Emirati stock markets of Dubai and Abu Dhabi closed trading down 5.61 percent and 3.57 percent respectively, as investors continued a selloff triggered by Dubai World’s debt woes.
Spokesmen for Singapore’s two other homegrown lenders, the United Overseas Bank and the Oversea-Chinese Banking Corp, said yesterday that they had no significant exposure to Dubai borrowers.
Singapore’s central bank said the country’s exposure to the United Arab Emirates, of which Dubai is one of seven emirates, is less than 1 percent of total banking assets.
“We do not expect developments in Dubai to adversely affect Singapore’s financial stability,” said the bank, known as the Monetary Authority of Singapore (MAS). “MAS continues to be in close contact with the financial institutions here, and with central banks and regulators in key jurisdictions.”
Singapore property giant City Developments Ltd (CDL), part of the South Beach joint venture in which Dubai World has a one-third share, said yesterday that it did not expect any impact on itself or the project.
However, it added it was prepared to inject more funding if needed.
“Should the joint venture company require additional funds in the future, the shareholders may be called upon to put in their proportionate share of funding,” CDL said in a statement.
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