Abu Dhabi's BCCI Losses Could Total $12 Billion
DUBAI - Banking regulators familiar with the collapse of Bank of Credit and Commerce International estimate that the Gulf state of Abu Dhabi, an investor in the bank, stands to lose $12 billion.
Various independent estimates have put the overall loss at anything from $4 billion to $15 billion. But Gulf-region officials outside Abu Dhabi said Abu Dhabi authorities themselves believe the figure will be $12 billion.
The officials were assigned by their governments to assess the losses and the likely ripple effect on other economies in the region.
Major Issues Unresolved
Abu Dhabi officials are declining to comment on BCCI while the future of the Luxembourg-based banking empire is unresolved.
The emirate's ruling al-Nahayan family and major financial institutions own 77.4% of BCCI Holdings, which controls banking interest of BCCI and its Cayman Islands sister cpmpany, BCCI Overseas.
The calculations do not rule out the possibility that the majority shareholders could eventually retrieve some of their money from bad debtors, or from the bank's surviving good assets.
Economic Squeeze Feared
But an initial $12 billion loss would equal almost two years of Abu Dhabi's oil revenue, or almost one whole year of the United Arab Emirates' federal budget - funded mainly by oil-producing emirates Abu Dhabi and Dubai.
Local bankers fear an economic squeeze while the emirate covers high initial payouts to compensate depositors and write off bad debts.
Abu Dhabi has already offered additional payments to British depositors and intends to compensate United Arab Emirates customers.
Last week, the British High Court awarded the majority shareholders a four-month reprieve from a Bank of England petition to wind up BCCI. Talks are continuing on ways to rescue at least part of the bank.