On a quiet Friday evening when everyone in the Middle East is enjoying their weekend the first ever UAE bank reached the point of a collapse (as we have been expecting and have warned everyone for years).
Invest Bank of Sharjah had reached a critical point of collapse with lack of liquidity, capital, profits and massive loan losses and needed to be bailed out surreptitiously on a Friday afternoon today, 14 Dec 2018!
Hundreds of bankers will be fired as the clean up begins and expect more bank mergers over the next several months.
Since Sharjah Govt is taking a majority stake hence, previous public shareholders (65%) will get wiped out and current top Emirati shareholders like Al Mazroei and Al Hosani and two privately held companies will lose their power and tons of money.
More billionaires just lost a lot of money in the UAE!
The banking mergers that have occurred recently in the Middle East are not a sign of strength or consolidation.
These mergers are happening under secrecy with an intention to hide the rapidly rising losses along with lack of liquidity which is what makes the Middle Eastern banks more scary than anywhere else in the world because we simply do not know how bad the problems are.
Finally, we can proudly claim that we have reached an “aha” moment that we have been predicting since 2015 with respect to banks in the Middle East.
This is just the beginning of a massacre in banking in the Middle East since there is absolutely no liquidity in the markets and below you will see how many businesses have collapsed just in the last few weeks and won’t be paying back anything to these banks.
Such losses have been occurring since 2015 and the damage is so severe that multiple banking mergers are happening and now the first ever bank bail out has happened. More are yet to come.
There are two banks with shareholding by Qatar one of which is United Arab Bank with whom Invest Bank was expected to have a merger since the past two years.
However, due to the ban and crisis with Qatar the merger cannot happen any more.
Which is what accelerated the crisis and this external catalyst led to the first ever Middle Eastern banking bail out today.
Government of Sharjah to acquire stake in struggling Invest Bank
Meanwhile, several major super markets have collapsed in Dubai.
News about one has showed up in the media yesterday since it cannot be shoved under the carpet.
Over 20 supermarkets of Al Manama supermarkets have shut while the owners have fled the UAE after forty years.
Estimated losses are rumored to be around five hundred million Dirhams.
Hearing rumors for the following supermarkets that owners may have fled, checks bounced multiple locations shut with hundreds of millions in losses especially for banks and dozens of major suppliers and hundreds of small suppliers and all the landlords:
Al Fathima Supermarkets
Al Madina Supermarkets
Al Ahli Supermarkets
Another iconic and long term retailer that has been present in Dubai for at least forty plus years, Sheeba Electronics in Meena Bazaar shall close in six months.
Landmark Group has fired two dozen managers last week and is suffering losses in retail stores while they have been shutting their restaurants such as Mango Tree, Rivington Grill, Carluccio’s etc.
Sobha Group didn’t pay salaries two months ago due to which more than two hundred employees ransacked their offices.
At least one more Spinneys supermarket (besides the twenty year old Bur Dubai one) shut on Damascus St, Sharjah
Several shops have shut in Yas Mall, Abu Dhabi and across all malls in UAE.
Major three storey department store of Chalhoub in City Walk (opened less than two years ago) will close in two months and fire about two hundred employees.
Bayer Pharma in Dubai has fired 80% of all their managers.
Supermarket chain Manama shuts outlets after owner ‘flees’ UAE
It is happening exactly as we have been expecting.
Real estate and all asset prices are plunging as are the stock markets. Dubai stock market has been the worst in the world for the last five years and has dropped over 50%.
In such a rapid downward spiral scenario where banks, schools, supermarkets, airlines, retailers etc are shutting down on a weekly basis and top paying jobs in banks, pharma companies, real estate developers, largest billionaire owned retailers etc are being culled in the thousands on a monthly basis, there is no way any business or employees can survive for long in such dramatic economic conditions.
We are also expecting lot of turmoil between USA and Saudi/UAE Jan 2019 onward.
Question is: Will a major Middle East real estate developer collapse next, or will it be another airline or will it be a bank?
There is a race going on between major corporations on who will collapse first in the Middle East.
Let’s see who is next!