Aussie banks face Dubai debt defaults

01/12/2009

All of Australia’s big four banks are financially exposed to possible debt defaults in Dubai however all say they are not going to be materially impacted. Bank shares plunged on Friday after three of the big four confirmed exposures to Dubai.

Commonwealth Bank yesterday joined the other three banks and confirmed that it does have exposure but does not expect to incur a material loss from its financial exposure to Dubai World, a holding company of the Dubai government because of an agreement to delay repayments.

The government wants a six month moritorium on debt repayments by Dubai World and subsidiary property unit Nakheel PJSC. Dubai World faces repayment of a $3.8 million bond on December 14.

ANZ, Westpac and NAB all confirmed on Friday that they were financially exposed to Dubai World but said that they did not expect material losses.

Yesterday Commonwealth Bank issued a statement that said: "Commonwealth Bank of Australia confirms that it does have a financial exposure to Dubai World but it does not expect to incur a material loss as a result of the recently announced debt moratorium."

Source: Herald Sun

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