Aabar, an Abu Dhabi state-linked investment vehicle, became the second-largest shareholder in UniCredit, Europe’s third-largest bank by market value, in late June. It paid $2.5 billion. Given the parlous state of Dubai’s economy and property market, Abu Dhabi’s interests might be better served by more investment in UAE banks.
The emirates’ corporate and banking sectors are closely intertwined. UAE banks received more than $19 billion in funding from the federal authorities in 2009. The sector’s total capital adequacy rose from 13.3% to 19.2% last year, with the tier 1 ratio rising from 11.7% to 15.5%....
