Citibank’s UAE loan rejections increase after introduction of credit bureau

Citi wants to attract affluent UAE customers to its retail banking business, touting its ability to give its clients access to Citi accounts in other parts of the world.

Citibank said that the number of rejections it has made on loan applications in the UAE has increased since the nation’s credit bureau came online last year.

The New York-based lender joins other banks here such as Abu Dhabi Islamic Bank in saying that the introduction of consumer credit data from Al Etihad Credit Bureau has led to a more cautious approach in giving out loans.

“It’s a bit too early to quantify because the bureau is forming up, you have to give us a couple of more months,” said Dinesh Sharma, the head of Citi’s consumer banking business in the UAE, adding that he foresees a further increase in rejections.

“If customers are overleveraged, we have no choice but to decline them,” he said.

Yesterday a joint survey released by the bureau, Citi and YouGov, showed that credit cards are the most popular form of borrowings by affluent UAE consumers. About a quarter of those surveyed said they had obtained a credit report from the bureau.

Designed to help keep credit growth in check and prevent consumers and corporations from overstretching themselves, Al Etihad Credit Bureau started operations last year. The UAE has one of the world’s highest rates of indebtedness at US$95,000 per household, banking executives say. The country also boasts one of the world’s highest incomes per capita.

That makes it rich pickings for banks, and the UAE is one of the countries that Citi is focusing on as it becomes more particular about where it focuses its firepower and what lines of business it gets into. In the past two years, the bank has exited its retail banking businesses in countries including Egypt, Turkey, Romania and Greece.

In the UAE, Citi wants to attract affluent customers to its retail banking business, touting its ability to give its clients access to Citi accounts in other parts of the world. However, instead of dramatically expanding its physical presence on the ground, the bank says it will focus instead on digital banking in a bid to attract tech-savvy and affluent customers who no longer place a premium on the branch network.

“We don’t expect a slowdown in our business,” Mr Sharma said. “We continue to invest in this market, we are investing in this market as we speak, we are investing in infrastructure, more digital smart infrastructure.”

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