The Gulf’s retail banks are imposing stronger credit checks on potential customers in a bid to start lending more responsibly after having suffered from a high volume of loan delinquencies during the crisis.   

“We are now looking at the turnover of employees and have an approved list of companies we have identified,” says Louis Scotto, head of retail banking at Qatar’s Doha Bank, speaking at the Middle East Retail Banking 2010 conference being held in Abu Dhabi from 27-28 September. “We’re running far more stringent credit checks and are trying to be smarter about who we lend credit to.”

International banks with a presence in the region have also tightened their lending criteria.

“We have a strong credit assessment process to ensure we know that our customers can re-pay their loans,” says Richard Musty, head of retail banking at Lloyds TSB. “It’s very much a back to basics approach and this means we’re moving away from transactional banking to a focus on relationship banking.”

The UAE is expected to introduce a new multiple of earning law before the end of the year, which will prevent customers from borrowing more than 50 per cent of the value of their salary. 

“Often banks were allowing customers to take out loans worth 60 to 80 times their salary and banks were just as much to blame for allowing that to happen,” says Suvo Sarkar, general manager of consumer and elite banking at NBAD.

“But banks have learnt to lend more wisely and borrowers to borrow more wisely. We have always had a more conservative lending policy whereby we lend more equally to locals and expatriates.”