The decision to strip the former Royal Bank of Scotland chief executive Fred Goodwin of his knighthood last week was a reminder that the aftershocks from the global recession have not gone away.
Mr Goodwin was knighted in 2004 but had the honour removed after he was blamed for his part in the British bank's collapse in 2008.
The action by the British government came weeks after RBS revealed it was shedding 3,500 jobs under cutbacks aimed at helping to revive the bank's fortunes.
In the UAE, lenders have not had the same scale of problems as RBS or other major European lenders.
The latest banking results paint a generally improving picture, with most lenders reporting healthy profits and sizeable dividend payments to shareholders. But a closer look at the fourth-quarter numbers suggests many banks are still grappling with the aftermath of the 2008 global financial crisis.
Non-performing loans (NPLs) and write-offs at many banks remain high, indicating they are still working through the system.
"Net interest income has been surprisingly strong," says Raj Madha, a banking analyst at Rasmala Investment Bank.
"We have seen banks write off a big chunk of NPLs, lowering their ratio, which may show they are sorting out the good from the bad and the hopeless."
The "bad and the hopeless" have mainly been linked to Dubai and its financial problems in the past few years. Many banks that lent to Dubai World, the government-owned conglomerate that completed a US$24.9 billion (Dh91.4bn) debt restructuring in 2010, had already set aside cash last year as a buffer against their exposure.
But they also had to take into account their exposure to Dubai Holding and other government-linked companies that have restructured other loans or are in talks to do so.
Total provisions for NPLs climbed to 20.1 per cent in the first 11 months of last year to Dh53.2bn, the latest Central Bank data shows.
And banks may not be out of the woods just yet.
"The significant increase in renegotiated private-sector loans may hide the true extent of the banks' asset quality problems, as some of these loans may re-emerge as non-performing loans," said Fitch Ratings in a report released in December. But analysts expect the number of NPLs to gradually taper off this year. As the bad debts clear, they believe lending will gradually pick up in the months ahead.
Bad loans have stopped banks from lending fresh funds. Abu Dhabi Commercial Bank's lending was flat in the fourth quarter, with First Gulf Bank's lending rising 2.7 per cent during the same period.
But events thousands of miles away in Europe are likely to have to have an important bearing on bank earnings.
Lenders have been somewhat protected from the euro-zone debt crisis thanks to their healthy cash cushion and lack of reliance on interbank lending markets. But some analysts say a global withdrawal of liquidity as a result of the crisis has hurt the local banking system. As much as Dh72bn of deposits was taken out of banks between June and November. The exodus followed a huge inflow of capital at the beginning of the year, with Dh78.7bn in deposits entering the financial system between January and the peak in April.
The reversal of this trend in the second half of last year meant bank lending exceeded deposits for the third month running in November. Funding has been tight throughout the banking system as European lenders re-examined their exposure to the region.
"Cutting lending lines is exactly what's impacted emerging markets," says Markus Schomer, the chief economist at PineBridge Investments. "I think the European Central Bank's long-term refinancing operation should stop this liquidity crisis … I'd expect that you'd see some of those flows re-emerging and I'd expect that money to come back."
Performance in the banking sector will also hinge on what happens in Abu Dhabi. Lenders have come to rely on state-backed projects in the capital as business in Dubai stagnated last year. But Fitch Ratings warned in a recent report an apparent slowdown in spending in the capital "could have some implications" for banks' loan books in the short term.
The approval by the Abu Dhabi Executive Council last month of several multibillion-dollar projects, including the Midfield Terminal at Abu Dhabi International Airport, will give banks cause for optimism.
Analysts say, however, the key to a major change in the fortunes of the UAE's banks may lie in the property market. Lending to the sector helped to propel banks to double-digit profits in the years up to 2008 before a downturn caused projects to stall and loans soured. Since then, slack demand for mortgages and other property loans has hit the banking sector.
While a return to the rash of lending of the glory days is viewed as too risky, a healthier market would help to improve the outlook for local lenders.
Signs of a recent bottoming out of property prices in some areas is encouraging news. New rules planned to control the market will also give lenders hope.
"We expect to see some improvement in property law, with homeowners associations coming into effect, and perhaps even clarification of the visa regulations, which would stimulate the property market," says Mr Madha.
A revival in the property sector would help banks in the Emirates to bury the memory of the global recession once and for all.
* with additional reporting by Gregor Stuart Hunter
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Moon Music
Artist: Coldplay
Label: Parlophone/Atlantic
Number of tracks: 10
Rating: 3/5
COMPANY%20PROFILE
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More from Rashmee Roshan Lall
The biog:
Favourite book: The Leader Who Had No Title by Robin Sharma
Pet Peeve: Racism
Proudest moment: Graduating from Sorbonne
What puts her off: Dishonesty in all its forms
Happiest period in her life: The beginning of her 30s
Favourite movie: "I have two. The Pursuit of Happiness and Homeless to Harvard"
Role model: Everyone. A child can be my role model
Slogan: The queen of peace, love and positive energy
The specs
Engine: 3.0-litre six-cylinder turbo
Power: 398hp from 5,250rpm
Torque: 580Nm at 1,900-4,800rpm
Transmission: Eight-speed auto
Fuel economy, combined: 6.5L/100km
On sale: December
Price: From Dh330,000 (estimate)
The Breadwinner
Director: Nora Twomey
Starring: Saara Chaudry, Soma Chhaya, Laara Sadiq
Three stars
COMPANY%20PROFILE
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Nepotism is the name of the game
Salman Khan’s father, Salim Khan, is one of Bollywood’s most legendary screenwriters. Through his partnership with co-writer Javed Akhtar, Salim is credited with having paved the path for the Indian film industry’s blockbuster format in the 1970s. Something his son now rules the roost of. More importantly, the Salim-Javed duo also created the persona of the “angry young man” for Bollywood megastar Amitabh Bachchan in the 1970s, reflecting the angst of the average Indian. In choosing to be the ordinary man’s “hero” as opposed to a thespian in new Bollywood, Salman Khan remains tightly linked to his father’s oeuvre. Thanks dad.
Glossary of a stock market revolution
Reddit
A discussion website
Redditor
The users of Reddit
Robinhood
A smartphone app for buying and selling shares
Short seller
Selling a stock today in the belief its price will fall in the future
Short squeeze
Traders forced to buy a stock they are shorting
Naked short
An illegal practice
COMPANY%20PROFILE
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COMPANY%20PROFILE
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EMERGENCY PHONE NUMBERS
Estijaba – 8001717 – number to call to request coronavirus testing
Ministry of Health and Prevention – 80011111
Dubai Health Authority – 800342 – The number to book a free video or voice consultation with a doctor or connect to a local health centre
Emirates airline – 600555555
Etihad Airways – 600555666
Ambulance – 998
Knowledge and Human Development Authority – 8005432 ext. 4 for Covid-19 queries
Jigra
Starring: Alia Bhatt, Vedang Raina, Manoj Pahwa, Harsh Singh
MATCH INFO
England 19 (Try: Tuilagi; Cons: Farrell; Pens: Ford (4)
New Zealand 7 (Try: Savea; Con: Mo'unga)
The specs
Engine: Long-range single or dual motor with 200kW or 400kW battery
Transmission: Single-speed automatic
Max touring range: 620km / 590km
Price: From Dh250,000 (estimated)
The specs
Engine: 2-litre or 3-litre 4Motion all-wheel-drive Power: 250Nm (2-litre); 340 (3-litre) Torque: 450Nm Transmission: 8-speed automatic Starting price: From Dh212,000 On sale: Now
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COMPANY PROFILE
Name: HyperSpace
Started: 2020
Founders: Alexander Heller, Rama Allen and Desi Gonzalez
Based: Dubai, UAE
Sector: Entertainment
Number of staff: 210
Investment raised: $75 million from investors including Galaxy Interactive, Riyadh Season, Sega Ventures and Apis Venture Partners