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Even tougher lending restrictions imposed by Middle East banks

There are serious concerns about the credit system in the region with stocks continuing to suffer because of the global finance downturn. The Dubai stock market has just suffered its worst week this year and in Kuwait trading was halted on Thursday by a court order.

Lenders in the property sector are imposing higher interest rates and making tougher demands on their customers. There are unconfirmed reports that some lenders are even identifying some sectors as too risky to consider including expatriate employees of real estate companies.

Bankers say they do not expect the Central Bank's injection fund to be used to initiate new loans but rather to support on-going commitments.

Emirates NBD has increased the threshold for personal loans and other banks are introducing similar measures. The National Bank of Abu Dhabi has tightened its lending policies. It now requires a 15% deposit for properties in Abu Dhabi and 50% for properties in Dubai.

'The liquidity crisis is affecting asset values and people's ability to repay. We have had to tighten up,' said John Malouf, general manager of consumer banking.

HSBC is asking for a 40% down payment for buying property in Abu Dhabi and 30 to 40% for Dubai.

It is a drastic change. Only two months ago it was easy to obtain finance of 90% or more to buy a property.

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