Emirates NBD,

Dubai's largest bank, is one of a number of local UAE lenders who have hired

British and American debt collection agencies to chase expatriate defaulters

who have absconded back to their home countries without settling their loan repayments.

“In response to

a growing number of fleeing debtors, banks such as Emirates NBD, ADCB [Abu

Dhabi Commercial Bank] and others have been increasing their recovery efforts

by employing international debt collectors and enforcers,” Radha Stirling, a

legal consultant specialising in the Middle East and founder of the

London-based charity Detained in Dubai, told Arabian Business.

Stirling

claimed that some of the third party agencies had begun using “intimidation and

harassment” in order to recover the funds outstanding, including threats to

issue Interpol notices against debtors, as well as harassment and threats of

harm.

She advised

expat debtors being targeted in the UK and US to do background checks on

whether the collection agencies are authorised to use such tactics to recover

debts and whether they are authorised to work on behalf of the banks they claim

to be representing.

“Any third

party claiming to represent a bank, should insist upon receiving confirmation

of representation before entertaining any communication,” Stirling said. “In

our experience, most debtors have acted in good faith and genuinely seek to

reach a manageable resolution. Threats simply cause undue stress and do not

change the situation and the debtor's ability to pay.”

While Abu Dhabi

Commercial Bank declined to comment, an Emirates NBD official spokesperson

issued the following statement to Arabian Business: “We would like to confirm

that, like other banks, Emirates NBD works with debt collection agencies,

within the legal rules and regulations of the jurisdiction where the bank uses

these agencies”.

Debtors

absconding is an unavoidable reality for all banks, not just those in the UAE,

but in November a senior banking official said lenders in the emirate are

working together to try to stem the number of small business owners fleeing the

country with unpaid debt, a trend which had allegedly reached around AED5

billion ($1.4 billion) by that point.

Small and

medium-sized enterprises (SMEs) have come under pressure amid a gradual drying

up of liquidity in the banking system due to the weak oil price and slowing

economic growth.

As a result,

some business people have chosen to "skip" the country, leaving

behind unpaid debt, a situation that bankers say has grown significantly from

previous years.

"We want

to take coordinated action on risk management," UAE Banks Federation

chairman Abdul Aziz Al Ghurair said.

"The idea

is to allow the customer to pay for his debt and stay in town if they have a

good intention. If they don't have a good intention, then it is no good (the

bank) spending time (with them), it doesn't help."

Current

bankruptcy rules are considered by lawyers to be outdated and largely untested,

with few struggling companies using the legislation.

The cabinet

approved a draft law in July 2015 but it still needs the support of the Federal

National Council, the country's legislative body, and the president.

Al Mansouri

also said the UAE would set up a credit guarantee scheme to help reduce the

risk of default for potential lenders. He didn't elaborate on the specific

details of the plan.