I am a 28-year-old father with a one-year-old child. My monthly income is Dh11,000 and I pay a Dh5,353 monthly instalment for a personal loan that I took recently to close another car loan. The personal loan has an outstanding amount of Dh36,000. The problem is that of the Dh5,647 remaining from my salary, I have six credit cards with five banks with total outstanding balances of Dh73,500. I don't really know how I will repay these debts without a reschedule and help from these banks. IM, UAE
Debt panellist 1: Jamal Alvi, chief credit officer at Abu Dhabi Islamic Bank (ADIB)
The customer is clearly paying more than he needs to each month. If the outstanding on his personal loan is Dh36,000 and he has another Dh73,500 on cards, he could consolidate the full amount into a single facility of Dh109,00 over 48 months with an instalment of possibly less than Dh3,000 per month, rather than pay Dh5,353 per month on his loan and another Dh3,600 (5 per cent of card balance) for his cards. However, to get the best rate - which would keep the monthly instalment at a reasonable level - he would need to approach the bank where his salary is currently being transferred. They should be able to consolidate his loan and external card debt into a single facility, which would ensure his total debt burden stays within 50 per cent of his salary.
Debt panellist 2: Ambareen Musa, founder and chief executive of Souqalmal.com
Based on your current financial situation, a debt consolidation loan could be a possible solution. With this option you can merge your entire debt into one loan including your all your six credit cards with outstanding balances totalling Dh73,500. Start by contacting banks offering debt consolidation loans such as ADIB and Dubai Islamic Bank. Depending on your profile (ie place of work, salary and length of service), banks might be able to merge your debts into one balance where you can start paying them off.
Even though refinancing your debt is a possible solution, bear in mind that it can also create more problems for you especially if you don’t address your spending habits. Make sure, applying for this new loan is a better option than the current situation you’re in. While your repayments might be more manageable, your consolidation loan could extend over a longer period for which you will have to pay interest - however if used widely, it can give you more breathing space.
Another alternative is to use the balance transfer facility on your credit cards where you can pay all your outstanding balances by transferring them to just one credit card. Aim to move your balance to the credit card which has the lowest interest. Also, ask your bank if you can get 0 per cent interest on your balance transfer for at least a certain period of time. However, watch out for any processing fee which may apply to avail of this service. Very often to transfer the balances from other cards to one card, there is a processing fee of around 2.5 per cent so make sure you are aware of all the fees involved.
If banks are unable to offer help, look for ways to increase your income by either asking for a pay raise, looking for a new job, asking friends and family or freelancing. Maybe you can sell assets such as property or jewellery to at least get enough cash to pay off your Dh36,000 loan. However, be aware of the early settlement fee your bank may charge. As mentioned earlier to become debt free, address your spending habits and see where you can cut corners
I would really encourage you to talk to your bank and ask them for a restructure. The longer you wait the more interest you will pile up and the problem is just going to get bigger. Identifying that you are in trouble is a good start and now you need to take action.
The Debt Panel brings together four financial experts: Jamal Alvi, the chief credit officer at Abu Dhabi Islamic Bank (ADIB); Ambareen Musa, the founder and chief executive of the comparison website Souqalmal.com; Rasheda Khatun Khan, a wealth and wellness planner and founder of Design Your Life; and Keren Bobker, The National’s On Your Side columnist and an independent financial adviser with Holborn Assets in Dubai. Together they answer queries in a weekly online column to help readers better tackle their debts. If you have a question for the panel, write to pf@thenational.ae.
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Formula Middle East Calendar (Formula Regional and Formula 4)
Round 1: January 17-19, Yas Marina Circuit – Abu Dhabi
Round 2: January 22-23, Yas Marina Circuit – Abu Dhabi
Round 3: February 7-9, Dubai Autodrome – Dubai
Round 4: February 14-16, Yas Marina Circuit – Abu Dhabi
Round 5: February 25-27, Jeddah Corniche Circuit – Saudi Arabia
Emiratisation at work
Emiratisation was introduced in the UAE more than 10 years ago
It aims to boost the number of citizens in the workforce particularly in the private sector.
Growing the number of Emiratis in the workplace will help the UAE reduce dependence on overseas workers
The Cabinet in December last year, approved a national fund for Emirati jobseekers and guaranteed citizens working in the private sector a comparable pension
President Sheikh Khalifa has described Emiratisation as “a true measure for success”.
During the UAE’s 48th National Day, Sheikh Khalifa named education, entrepreneurship, Emiratisation and space travel among cornerstones of national development
More than 80 per cent of Emiratis work in the federal or local government as per 2017 statistics
The Emiratisation programme includes the creation of 20,000 new jobs for UAE citizens
UAE citizens will be given priority in managerial positions in the government sphere
The purpose is to raise the contribution of UAE nationals in the job market and create a diverse workforce of citizens
JAPANESE GRAND PRIX INFO
Schedule (All times UAE)
First practice: Friday, 5-6.30am
Second practice: Friday, 9-10.30am
Third practice: Saturday, 7-8am
Qualifying: Saturday, 10-11am
Race: Sunday, 9am-midday
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Circuit Length: 5.807km
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MATCH INFO
Juventus 1 (Dybala 45')
Lazio 3 (Alberto 16', Lulic 73', Cataldi 90 4')
Red card: Rodrigo Bentancur (Juventus)
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
