UAE banks to face ‘wave’ of mergers, acquisitions if coronavirus crisis persists: Fitch – ZAWYA

UAE banks to face ‘wave’ of mergers, acquisitions if coronavirus crisis persists: Fitch – ZAWYA

UAE banks to face 'wave' of mergers, acquisitions if coronavirus crisis persists: Fitch. The ratings agency also noted that deteriorating business conditions in the retail and wholesale trade, and in the real estate and construction sectors - which represented 29 percent of the total bank lending at the end of 2019 - due to the coronavirus will weaken banks' asset quality.. "UAE banks' potential problem loans (Stage 2 and Stage 3 loans under IFRS 9) are already high, averaging 10 percent to 20 percent of gross loans, and are likely to increase," the note added.. "The government support package allowing the postponement of principal and interest payments could provide some relief, but will delay the recognition of impaired loans and will understate the real level of problem loans.. Banks with already low reserve coverage of problem loans are the most vulnerable to rising Stage 2 loans," the note said.. Pressures on banks' asset quality will increase if Dubai Expo 2020 is severely disrupted, Fitch said, noting that many banks are exposed to Dubai Expo 2020-related projects in infrastructure and the real estate and construction segments..