Rising number of credit card defaulters run from the UAE

From Thomson Reuters
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Some UAE banks are seeing up to 2,500 customers leave the country every month without paying off their credit card bills, a number that could rise in June, a senior RAK Bank official said on Sunday.

RAK Bank business advisor David Martin said most of those leaving without settling their credit card bills were linked to the construction sector in Dubai, the hardest hit of the seven emirates that make up the United Arab Emirates federation.

"On our credit card portfolio, in common with other banks, we are seeing increasing numbers of 'skips' - that's people leaving the country without paying their bills," Martin said.

Martin said the bank's research indicated banks in the UAE have 1,500-2,500 customers leave every month over the past six months without paying what they owe on credit cards.

RAK Bank, which has around 20 percent market share in the country's credit card sector with around 300,000 customers, has seen around half that rate in the same period, Martin said.

"The instances of skips in our bank, according to our own intelligence, is 50 percent below our competitors," he said.

"Most of the skips are connected to the construction industry in Dubai. We don't see a lot of skips in Abu Dhabi or Sharjah."

Thousands of expatriates have lost their jobs in the Gulf trade and tourism hub of Dubai since the financial crisis triggered a real estate crash late last year that ended a six-year economic boom.

Although growth in the number of "skips" has begun to level off in the past two months, Martin said, banks in the UAE could face a new wave of customers leaving with their debts unpaid as expats who have lost their jobs may wait to the end of the school year to leave.

"We could see a resurgence of this at the end of June," he said.

RAK Bank recovers around a quarter of the debt that goes unpaid as a result of one of the customers leaving the country, Martin said. (Reuters)

You're not a lawyer are you?

How bizarre is this? The banks in Dubai have a list of occupations that are now barred from applying for bank loans and credit cards. Along with anyone in the construction field, real estate or believe it not banking, lawyers are now on the list of barred occupations. However, 'non-professional' employees of law firms are not included in the ban. So as a result, we have the strange situation where a partner in a law firm earning a 6 figure salary cannot apply for a credit card or bank loan, but his secretary can. One of our secretaries has just applied for a credit card from a UK bank that starts with Bar......, no problems, she's been pre-approved and they even sent someone to the office to collect her completed application form. The bank rep asked her several times to confirm what occupation is shown on her labour card, when she said "Archiving Clerk" the bank rep said "Oh that's fine, as long as it doesn't say legal advisor" (the UAE term for lawyer). Just to clarify, secretarial positions in the UAE by law must be filled by Emirati Nationals so you'll find that Western secretaries here in Dubai have strange occupations written on their work permits: for example, instead of "secretary" I know of many"filing clerks", "archiving clerks", an "accounts clerk" who proudly admits she failed maths and the best paid telephone operator in Dubai!