* Emirates NBD is Dubai World's biggest creditor
* Has set aside provisions of 5 pct on more than $2.5 bln
* Says waiting to see more progress by Dubai World
DUBAI, April 24 Emirates NBD, Dubai's
biggest bank, will only reverse provisions on its exposure to
conglomerate Dubai World after seeing further
progress on asset sales and debt repayment, it said on Thursday.
Emirates NBD is Dubai World's biggest creditor with an
exposure of more than 9 billion dirhams ($2.5 billion), against
which it has set aside provisions of 5 percent.
If that debt is reclassified as performing, it will provide
a significant one-off boost to the bank's profits.
Last month, after making only interest payments to its
creditors, Dubai World repaid around $280 million of the
principal debt to creditors ahead of schedule and an Emirates
NBD executive told Reuters the bank was confident it would be
able to reclassify the debt, possibly this year.
But on Thursday, the bank's executives said they were
approaching the issue conservatively.
"This is encouraging and we will wait to see further
progress on this account," Surya Subramanian, Emirates NBD chief
financial officer, told reporters.
"As of now, it remains on the stock of impaired loans."
Subramanian did not say when exactly Emirates NBD could make
a decision, but said if creditors received further repayments
then ENBD would feel "more confident in reassessing the debt
If the bank did reclassify its Dubai World exposure today,
he said, this would instantly bring its bad loan coverage ratio
to the target level of 80 percent from the current 61 percent.
Dubai World ran into trouble during the emirate's 2009
property market collapse and had to restructure $25 billion of
debt, of which about $14.4 billion was owed to around 90 local
and foreign banks, and the remainder to the Dubai government.
In recent months, there has been increasing optimism among
bankers that the conglomerate will be able to make scheduled
payments in its restructuring plan, partly by selling assets.
Mohammed al-Shaibani, chief executive of sovereign wealth
fund Investment Corp of Dubai and a key figure in negotiating
the emirate's debt restructurings in recent years, told Reuters
last month that Dubai World would be able to meet a $4.4 billion
loan maturity in May 2015 and expected to make some other
Emirates NBD is 55.6 percent owned by Investment Corp of
(Reporting by Olzhas Auyezov; Editing by Susan Fenton)