That sharia finance thingy is not  working out very well for Aussie bankers, who are very good at screwing their loyal customers back home,  but regularly get  a beating when they go overseas:

Lips sealed on Aussie exposure in Dubai crisis

AUSTRALIA’S major banks were tight-lipped on their exposures to financially troubled Middle East conglomerate Dubai World, which has sought permission from more than 50 international lenders for a six-month freeze on repayments on $US80 billion ($A89 billion) of loans.

Heraldsun

Dubai World, which owns a vast portfolio of assets including 45 international ports, commercial properties across all continents and golf courses in Europe and the US, is under pressure to offload major infrastructure assets to ease its debt burden.

The state company plunged into crisis on Thursday after international ratings agency Fitch began slashing the credit ratings of other state-owned companies in the sheikdom in response to the debt moratorium request by Dubai World.

Australian companies have billions of dollars at stake with entities based in Dubai, but last night were trying to play down the significance of their exposures.

However, investors ran for cover yesterday with $38 billion slashed from the Australian share market’s capitalisation as the ASX 200 plunged 2.9 per cent in its worst day for three months.

The Australian dollar tumbled more than US2, falling below US90 last night, and the betting by financial markets on an interest rate rise next week diminished sharply.

Share markets throughout Asia also slumped heavily yesterday and European markets were off less than 1 per cent early last night but bank stocks were battered.

New York’s Wall Street, closed for a Thanksgiving holiday when news of the Dubai crisis broke, was also expected to fall overnight.

Tom Elliott, managing director of hedge fund MM&E Capital, said the Dubai situation had an “eerie similarity” to the 1997 Asian Crisis, an event triggered by the collapse of the Thai baht and the inability of countries in southeast Asia to balance their books.

“The penny is starting to drop here that the whole issue of sovereign default is still with us and, if anything, it’s got worse because public debt levels have gone through the roof in the past year,” he told BusinessDaily.

However, other market watchers said the Dubai issue, while creating a lot of short-term uncertainty, was unlikely to lead to a global meltdown.

AMP Capital Investors chief economist Shane Oliver said most emerging economies, particularly those in Asia and South America, were in good shape with low debt levels.

He added that other Middle East countries had not undertaken the massive building and debt spree that Dubai had.

“Our view is that once the dust settles the Dubai debacle will ultimately turn out to be a storm in a teacup,” he said.

Macquarie Group, which operates an office with 50 staff in the United Arab Emirates, was among the hardest hit stocks yesterday on concerns its joint venture partner, Abu Dhabi Commercial Bank, may lose billions of dollars due to its exposure to Dubai World. Macquarie’s share price fell $2.31 to $45.34.

The big four banks – NAB, Westpac, CBA and ANZ – all admitted they had lent money to Dubai World but none would reveal their precise exposures.

However, BusinessDaily understands the four banks collectively have more than $1 billion at risk with Dubai World and other state-owned entities, with Westpac exposed to the tune of more than $300 million.

Most of the Westpac exposure is secured by the Australian port assets of DP World, a subsidiary of Dubai World.

This exposure is believed to be relatively secure for the bank because DP World is not part of the debt moratorium requested by Dubai World.

Westpac said in an ASX statement that it did not expect to incur any “material loss”.

The bank’s terse rhetoric was replicated by ANZ and NAB, but Commonwealth Bank spokesman Steve Batten refused to make any comment, saying it was inappropriate to talk about client information.

Local infrastructure funds are now eyeing a range of assets within the Dubai World group, many of which are expected to be sold to retire debt.

The Australian Infrastructure Fund which operates regional ports in Australia is seen as a possible buyer of the port assets if they are put up for sale.

DP World is the largest port operator in Australia through its ownership of ports at Melbourne, Sydney, Brisbane and Adelaide.

A string of other Australian corporates also exposed to Dubai World through its property investment arm, Nakheel.

They include Sunland, Leighton Holdings, Worley Parsons and Mirvac Group.

Mirvac has formed a joint venture with Nakheel to develop a property in Bromelton, Queensland, while Leighton Holdings generates almost 10 per cent of it contracts in Dubai and the other markets in the United Arab Emirates.

“The ability to get paid on existing projects gets called into question by the Dubai World credit issue,” said Tim Schroeders of Pengana Capital.

“This is a near-term hiccup. Longer term it shouldn’t impede future growth ambitions in the region.”

Sunland has more than $2 billion invested in Dubai projects, including the upmarket Versace Hotel.

Sunland scrip closed only 2 per cent down, but investors crunched Leighton Holdings down 4 per cent and each of the major banks.

NAB was the hardest hit, dropping 4 per cent or $1.12 to $27.01.

Tagged as: Aussie banks, Dubai finance crisis, Sharia Finance