RIYADH: Abu Dhabi Commercial Bank, the second largest bank in Abu Dhabi, is planning to sell about 4.1 billion dirhams ($1.1 billion) of bad debt to clean up its balance sheet, battered mainly due to payment defaults by high-profile corporate clients.
The bank has codenamed this initiative “Project Turbo,” and it has already kicked off a process to sell the claims, mainly secured by personal and corporate guarantees, along with real estate assets, Bloomberg reported.
Citing a bank document for potential buyers, the report noted that the bank wants to avoid spending time and money on costly enforcement actions outside the UAE.
The report further added that ADCB is seeking to sign a deal by the end of September.
According to the document, ADCB is working with Interpath Advisory, KPMG’s former UK restructuring practice, to carry out the sale.
The people who wished to stay anonymous said that this move from ADCB will also prompt other lenders in the UAE to embrace similar actions if the central bank approves.
According to the bank’s financial statements, it had to absorb 6.6 billion dirhams in impairment charges in 2020 and 2021. ADCB posted a net income of 3.01 billion dirhams in the first half of 2022 despite booking almost 1 billion dirhams in impairment charges.