Dubai abandons $10bn debt restructuring
Dubai’s government has walked away from the $10bn (£6.3bn) debt restructuring of one of its biggest conglomerates, leaving creditors, including the Royal Bank of Scotland (RBS), with exposure to potentially big losses.
By Louise Armitstead
8:47PM GMT 05 Feb 2012
Dubai Group, the financial services arm of Dubai Holdings, has written a letter to its creditor banks telling them that the emirate’s Supreme Fiscal Committee (SFC) had quit the negotiations and would not inject any government cash. Dubai Holdings is controlled by the emirate’s ruler, Sheikh Mohammed bin Rashid Al Maktoum.
The blow came in reply to a letter to Dubai Group from some of the creditor banks requesting $2bn in financial support from “the Dubai government or other equivalent quality equity”. The request was made in December by five of the six members of the bank steering committee and was signed by RBS and France’s Natixis bank.
Dubai Group reportedly plans to table a separate proposal to creditors at the end of February. A spokesperson for the stricken group, which focuses on banking, investments and insurance, told reporters it was “fully committed to reaching a consensual agreement reasonable for all stakeholders”.
Dubai Group’s creditors consist of 44 banks which have not received interest payments on their loans since August 2010.
Dubai has been working through a raft of restructuring since 2009, all of which has had some form of government involvement in negotiations.