DUBAI – Banks in the United Arab Emirates are filling the gap left by European institutions pulling back from the country’s loan market – a trend that benefits local lenders even as margins face pressure and regulation weighs on growth.



Lending in the UAE, the second biggest Arab economy, grew just 1.8 percent in June from the end of December, according to central bank data.



But most local banks reported loan growth that exceeded the market rate.



Six of the eight largest local banks by stock market capitalization did so, led by First Gulf Bank with a 6 percent rise and Mashreq, up 5.1 percent.



Even smaller local banks appear to be profiting from the pullback by European banks, which are becoming more conservative globally because of financial pressures at home.



“With the global crisis in the eurozone, some banks are focused on their home markets and we have been able to move under the radar and take market share,” Paul Trowbridge, chief executive of United Arab Bank, the 12th largest local bank, said recently.



International banks do not reveal how much they lend into the UAE and some non-European lenders, most notably Citi, HSBC and Standard Chartered, continue to play significant roles in the country’s loan market.



European banks have not completely withdrawn either, especially if they can lend in euros, as shown by BNP Paribas’ role in an $850 million facility for Abu Dhabi’s International Petroleum Investment Company. – Reuters