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Abu Dhabi Commercial Bank PJSC is trying to clean up a balance sheet battered by a series of high-profile corporate defaults.
The second-largest lender in the emirate kicked off a process to sell claims of over $1 billion that are mostly secured by personal and corporate guarantees, according to a bank presentation for potential buyers.
The de-cluttering of the balance sheet is one of the goals of the sale. The bank doesn't want to spend time and money on expensive enforcement actions outside of the United Arab Emirates.
A successful deal, which could be one of the Gulf's biggest bad debt sales, would help the company move on from several corporate collapses. ADCB has had to write down the value of many of its loans because of the restructuring talks.
According to people with knowledge of the matter who asked not to be identified, if the central bank approves, a sale may prompt other banks to do the same. According to the document, ADCB wants to sign a deal by the end of the month.
According to its financial statements, the company had to take impairment charges of over 6 billion dirhams in 2020. The bank had a net income of 3.01 billion dirhams in the first half of the year.
According to the document, the sale is being worked on with Interpath Advisory. Representatives for Interpath didn't want to speak.
If the potential recovery rate is too low, banks in the Gulf region often sell problem debt to specialized funds. Distressed debt funds can make a lot of money if they acquire a loan book at a steep discount.
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