LONDON (Reuters) - European banks were hit by concern about potential exposure to debt problems in Dubai on Thursday, while companies where Middle Eastern investors own big stakes also came under pressure.
Dubai, whose extravagant building projects have been largely put on hold since the start of the global financial crisis, said on Wednesday it would ask creditors at its flagship firms Dubai World and property developer Nakheel to delay repayment on billions of dollars of debt.
By 1230 GMT on Thursday the DJ Stoxx European bank index was down 3.3 percent at 222 points, putting it on track for its biggest daily fall since June.
Companies with significant Middle Eastern shareholders, such as the London Stock Exchange, were also hit by concern the holdings could be cut to meet obligations at home.
"The worry is about the exposure of the banks given the rapid pace of expansion in Dubai and around the area in the last few years," said one bank analyst, who asked not to be named.
Among the biggest fallers were HSBC, Royal Bank of Scotland , Lloyds Banking Group and ING, whose shares all fell over 4 percent.
They were among nine banks who were bookrunners on an outstanding $5.5 billion syndicate loan to Dubai World in June 2008, according to Thomson Reuters LPC data. Banks may have sold down or increased their loan exposure in the secondary market, and one analyst estimated that bookrunners typically retain only about 10-15 percent of a loan or bonds.
HSBC, RBS and Lloyds all declined to comment. ING said it had a negligible exposure to Dubai World bonds and saw no reason to divert from current guidance on risk costs for next quarters.
World Markets Into Downspin After Dubai Debt Problems http://tanmaygopal.blogspot.com/2009/11/world-markets-into-downspin-after-dubai.html
No comments:
Post a Comment