ADCB has refuted a Bloomberg report that claimed the bank was in talks with funds to sell its non-performing loans (bad loans) worth AED 13.5B ($3.68B) through a group of buyers led by Lexolent. In a statement to the stock exchange, the bank denied being in any discussions with the named company regarding the sale of its bad loans.
Despite this, international investors specialising in distressed debt have expressed interest in opportunities in the Gulf region, where banks may need to provision more non-performing loans as companies navigate global economic challenges and post-pandemic recovery.
“Banks are becoming more proactive in managing their loan books and we are seeing more interest to explore secondary market alternatives rather than legal enforcement,” Berkay Oncel, head of investments for the Middle East at SC Lowy, told Reuters in January.
U.S. investment fund Davidson Kempner in January purchased a $1.1B loan portfolio from ADCB. The following month Grant Thornton and its Asset Recovery Fund purchased AED 1.3B in distressed non-performing loans from the Abu Dhabi bank, according to Reuters News.
Grant Thornton said the move “indicates how local banks in the UAE are cleaning up their books to support the growing market while remaining compliant with international regulatory and banking standards”.
