Sensing slowdown in the economies in middle-east region, Bank of Baroda (BoB) has reworked its business strategy in United Arab Emirates (UAE) to focus on trade and short term finance and ensure asset quality.
Riding on huge flow of money from rising oil prices, the region saw a large scale growth in the construction activity. This also led to an increase in the funding to real estate projects.
But following a collapse in oil prices and credit crunch, many projects are facing rough weather. It has also raised questions over repayment of loans to banks. Asked about the risks from the real estate in UAE, BoB chairman and managing director M D Mallya said bank exposure to real estate assets is small, about six per cent of advances.
This is spread over 10 accounts and bank is closely monitoring the performance. Its credit exposure in the region is about Rs 9,000 crore while the liabilities (deposits) are above Rs 10,000 crore. The exposure to such asset (realty) would remain limited, with change in economic and business environment; BoB is concentrating on the buyer’s credit (trade finance). This is self liquidating short term finance, he added.
