The Central Bank of the UAE said the total exposure of UAE banks to two Saudi conglomerates in default on their debt is $2.9bn.

According to a bank statement on 19 November, banks in the UAE should provide provisions for their exposure to the Saad Group and Ahmad Hamad al-Gosaibi & Brothers by the end of 2009.

The central bank also gave guidelines for how banks should make the provisions. It said that in the UAE should make provisions for 50 per cent of their exposure to the two groups, and 100 per cent of their exposure to two subsidiaries, Bahrain-based Awal Bank, a subsidiary of Saad Group; and The International Banking Corporation, a subsidiary of Al-Gosaibi.

“The number of lending banks to the two groups and their related banks is 20 banks,” said the bank.

The central bank added that the UAE banking sector may make profits of AED20bn ($5.4bn) in 2009, compared to AED26.8bn in 2008.