UAE bank ADCB denies it is in talks to sell $3.7 bln of bad loans

Abu Dhabi Commercial Bank PJSC (ADCB) is not in talks with funds to sell 13.5 billion dirham ($3.68 billion) of bad loans, it said late on Thursday in response to a Bloomberg report citing unnamed sources.

“ADCB denies in the strongest terms that it is in ongoing deliberations with the company named in the report related to the sale of non-performing loans,” the bank said in a stock exchange filing.

Bloomberg had reported that an entity called Lexolent was looking to put together a group of buyers to purchase ADCB’s non-performing loan book.

International investors focused on distressed debt have said they are eyeing opportunities in the Gulf region, where banks may need to make provisions for more non-performing loans as companies navigate global economic headwinds and post-pandemic recovery.

“Banks are becoming more proactive in managing their loan books and we are seeing more interest to explore secondary market alternatives rather than legal enforcement,” Berkay Oncel, head of investments for the Middle East at SC Lowy, told Reuters in January.

US investment fund Davidson Kempner in January purchased a $1.1 billion loan portfolio from ADCB. The following month Grant Thornton and its Asset Recovery Fund purchased 1.3 billion dirhams in distressed non-performing loans from the Abu Dhabi bank.

Grant Thornton said the move “indicates how local banks in the UAE are cleaning up their books to support the growing market while remaining compliant with international regulatory and banking standards.”