Australia little affected by Dubai

November 27, 2009
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, SYDNEY, Nov 27 – Australia\’s major banks said Friday they expected little impact from Dubai\’s debt scare, with one analyst labelling it a "storm in a teacup".

Dubai rattled financial markets when on Wednesday it said it would ask creditors of its Dubai World conglomerate for a debt moratorium of at least six months.

Global markets fell sharply on the news, with European exchanges particularly hard hit. Australian shares slumped on the news, closing down 2.9 percent Friday, with financials taking a nosedive.

Australia\’s largest bank by value, Commonwealth, declined to comment on its exposure to Dubai World, but the other three major lenders reported little or no links to the city-state\’s largest corporate entity.

Westpac reported some financial exposure but said it didn\’t expect material losses to result, a sentiment echoed by National Australia Bank.

ANZ Banking Group said it has "no material exposure" to Dubai World.

"We work with a number of well-established relationships throughout the Middle East, but we do not believe there will be any material adverse impacts to these relationships as a result of the moratorium announced by Dubai World," an ANZ spokesman said.

Macquarie Bank, Australia\’s largest investment bank, said it had "negligible exposure to Dubai World and to other Dubai-based organizations."

While the short-term fallout remained unclear, AMP Capital Investors chief economist Shane Oliver said he didn\’t believe the Dubai "mini-crisis" would have a lasting effect.

"Our view is that once the dust settles the Dubai debacle will ultimately turn out to be a storm in a teacup," said Oliver.

Dubai has seen a surge in extravagant building projects, with vast skyscrapers springing up in the desert state, but it has suffered in the global financial crisis. Most of its debt is held by state-backed companies.

— Dow Jones Newswires contributed to this story —

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