Credit card defaults on the rise in UAE

[LRE]

Reuters
Published: May 24, 2009, 23:46


Dubai: Some UAE banks are seeing up to 2,500 customers leave the country every month without paying off their credit card bills, a number that could rise in June, a senior Rakbank official said on Sunday.

Rakbank business advisor David Martin said most of those leaving without settling their credit card bills were linked to the construction sector in Dubai.

"On our credit card portfolio, in common with other banks, we are seeing increasing numbers of 'skips' - that's people leaving the country without paying their bills," Martin said.

Martin said the bank's research indicated banks in the UAE have had 1,500-2,500 customers leave every month over the past six months without paying what they owe on credit cards.

Rakbank, which has around 20 per cent market share in the country's credit card sector with around 300,000 customers, has seen around half that rate in the same period, Martin said.

"The instances of skips in our bank, according to our own intelligence, is 50 per cent below our competitors," he said. "Most of the skips are connected to the construction industry in Dubai. We don't see a lot of skips in Abu Dhabi or Sharjah."

Thousands of expatriates have lost their jobs in the Gulf trade and tourism hub of Dubai since the financial crisis triggered a real estate crash late last year that ended a six-year economic boom.

Although growth in the number of skips has begun to level off in the past two months, Martin said, banks in the UAE could face a new wave of customers leaving with their debts unpaid as expats who have lost their jobs may wait until the end of the school year to leave.

"We could see a resurgence of this at the end of June," he said.

Rakbank recovers around a quarter of the debt that goes unpaid as a result of one of the customers leaving the country, Martin said.

http://www.gulfnews.com/business/Banking...16680.html