For nearly a week, ENBD customers have been denied access to withdraw or transfer funds, causing concerns that the bank is freezing outflows amidst the economic downturn. Radha Stirling explains that these fears are justified, and UAE banks provide little or no security for expats.
Image courtesy of Arabian Business
For the past several days Emirates NBD customers in the UAE have been panicking. The website has not been working, the ATMs are not working, the ENBD app isn’t working. No one has been able access their accounts, no one can withdraw or transfer funds; some people have been unable to even confirm that their accounts still exist.
Understandably, customers fear that their money is not secure. The bank issued an apology for the service failures, saying that they are in an upgrade process that has disrupted their online and mobile app systems; but two days after that explanation, and customers were still unable to access their funds.
ENBD’s first quarter profits fell 24% as a result of the Covid-19 pandemic, and the overall economic outlook in the UAE has weakened. Customers worry that the “teething problems” ENBD claims it is experiencing because of a system upgrade may actually be a deliberate restriction to prevent money from being taken out of the bank.
It is a valid concern. Historically, banks in the UAE have panicked in economic downturns, and when they panic, they can be ruthless.
- Radha Stirling, CEO of Detained in Dubai,
Stirling notes that in the wake of the global financial crisis of 2009, UAE banks were merciless, “Banks abruptly closed lines of credit for businesses, called in loans that still had years left in their payment schedules, seized development projects and foreclosed on mortgages. In the past, we have seen banks in the Emirates take short term decisions to secure their profitability that led to long term problems for customers; decisions that actually caused loan defaults and bounced cheques that would not have otherwise happened. The banks are never accountable for the financial troubles they create for private individuals, but in the UAE, these financial troubles often lead to criminal charges, convictions, jail time and Interpol Red Notices. So, the fear and frustration among ENBD customers right now is very understandable. It has been more than four days denying people access to their funds. Even if this is not a calculated measure by ENBD to limit outflows from the bank during an economic crisis, it is highly disruptive to people’s lives; they cannot withdraw, cannot make payments, and could potentially be held liable for financial obligations ENBD is preventing them from fulfilling.”
Stirling’s organisation, Detained in Dubai, assists expats with the fallout when financial problems become legal problems in the UAE. “A great deal of our work is dedicated to helping foreign nationals in Dubai who are grappling with financial disputes of one form or another,” she says, “If a cheque bounces, it is a jail sentence; if a loan defaults, it is a jail sentence; if someone is even late on a payment, it can mean jail time. We negotiate with the banks and we can liaise with Interpol when expats are wrongfully subjected to Red Notices over money issues, but it is imperative that people seek professional support as early as possible because these matters escalate rapidly in the UAE.”
Profits of the corporate and institutional banking business of ENBD decreased 55% on-year in the first quarter partially due to lower loan recoveries, increasing concerns that the bank may take unilateral steps against debtors. “Low interest rates and low oil prices, during an already contracting economy are making the banking sector in the region uneasy,” Stirling explains, “The worry is that banks like ENBD will freeze customers’ deposits and unilaterally nullify loan agreements, demanding full payment immediately, and so on. Hopefully, what is happening right now really is just a glitch in the system, but experience tells us that the system itself provides very little security to individual customers and expat business owners.”