HSBC Holdings Plc and Lloyds TSB Group Plc, two of the largest UK banks operating in the United Arab Emirates, are reducing lending there as the credit crunch begins to infect the Gulf. Lloyds TSB, the London-based bank that entered the UAE market in 1977, stopped offering mortgage loans for apartments in Dubai and reduced the amount it will lend to 50 percent of the price of a villa from 80 percent, it said today in a statement. HSBC, Europe's largest bank, will require customers in the emirate to earn at least AED20,000 ($5,445) a month to get a personal loan, HSBC spokeswoman Andrea Jaishankar said in an interview on Wednesday. “Our new credit eligibility criteria will ensure that customers receive loans that they can afford to repay at a time of considerable uncertainty around the world,'' Jaishankar said. The lending restrictions come after house prices in Dubai quadrupled in the last five years, fueling concerns that a sharp fall is imminent. The government said this week it has set up a committee to restore confidence in the real estate market. Tamweel PJSC and Amlak PJSC, the largest home lenders in the UAE, made few mortgages in the third quarter and even fewer in the fourth quarter, said analysts at Dubai-based EFG-Hermes Holding SAE. “It's clearer that property prices are in retreat,'' said Raj Madha, banking analyst at EFG-Hermes, the largest Arab investment bank by market value, in a telephone interview today. “Once we have reached that bottom, we will see confidence return and transactions come back to the market.'' Lending in the UAE, which rose as much as 50 percent annually over the last two to three years, will slow as the global credit crisis keeps capital markets in “turmoil and shut,'' Eirvin Knox, chief executive officer of Abu Dhabi Commercial Bank PJSC, said on Tuesday. Central banks across the Gulf have taken action to avert a liquidity crisis. The United Arab Emirates and Kuwait have guaranteed deposits while the Saudi Arabian Monetary Agency last week slashed its benchmark repo rate by 1 percentage point to 4 percent.
