'Abu Dhabi banks have big Dubai exposure'

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Abu Dhabi Commercial Bank has at least 8 to 9 billion dirhams (USD2.18 to USD2.45 billion) exposure to Dubai World and related entities, which will require the bank to book more provisions, an senior executive of the bank said.

"We have to face the stress that will be caused to our balance sheet and profit and loss account due to this exposure to Dubai World and associated companies because it is a default," the executive, who declined to be named, told Reuters by phone.

"Yes, we will have to take more provisions," he said.

Banks in the UAE are expected to pay a heavy price for any default that may occur on debt issued by firms related to Dubai World and its property arm Nakheel. Abu Dhabi banks lent heavily to firms in its fast-growing neighbour during the property boom that went bust with the financial crisis in 2008.

"During those years, the property market was still in its infancy in Abu Dhabi, so like other banks here, we too diverted our credit to Dubai," the ADCB executive said.

Separately, First Gulf Bank has at least 5 billion UAE dirhams (USD1.36 billion) exposure to Dubai and its associated companies including Nakheel, an executive at the bank who also declined to be named said.

"At this stage, all we can say is, yes our credit is about 5 billion dirhams to the Dubai government-owned companies. We have an exposure to Nakheel's bonds," the FGB executive told Reuters.

Neither executive could be named for this report as they were not authorised to speak to the media.

(USD1 = 3.673 Uae dirhams)