Banking market situation in UAE at the time of Al Hilal’s launch On December 22nd, 2010, Al Hilal Bank (government-owned Islamic Bank in the UAE) was voted “Best Retail Bank” by the registered readers of the magazine Islamic Business and Finance. However, two and a half years earlier, Al Hilal Bank entered the market amidst a global financial crisis. It was a huge step taken by the shareholders as they saw an opportunity in what was the most uncertain financial environment since the 1930s, whereas the others only saw a risk. While domestic and foreign banks were receding, Al Hilal stepped in to fill the gap, ensuring that valuable projects continued to be funded. Al Hilal Bank continued to stand out among its competitors by taking actions…show more content… GDP had grown by an average of 9 per cent from 2003 to 2007, and the non-hydrocarbon sector had grown at an even faster pace because of population growth of 5 per cent per year. This resulted in housing shortages and speculations which drove up real estate and commodity prices. Since there was speculation that UAE would detach its dirham from the US dollar, the inflows of foreign capital amplified in mid-2007. Fifty banks in the UAE held assets of $336 billion; the top three banks had 30 per cent of the market share. Since the UAE banks’ share of the Arab world’s assets was high, it is proven that the banking industry is very competitive. Because of the competitiveness, the government needs more consolidation to meet the demands of UAE’s growing economy. Apart from this, the growing economy caused the UAE’s population to grow from the influx of workers in the construction, trade and financial sectors. Alongside the onset of the global “credit crunch” and the start of the financial crisis in early 2008, financial institutions in the UAE started to reduce their exposure to domestic property markets. The UAE Central Bank (CBU) estimated that credit growth would fall from 50 per cent in the first half of 2008 to less than 10 per cent in 2009. Lenders began narrowing their credit requirements, causing a slowdown in real estate and construction and a significant decline in value of Dubai and Abu Dhabi’s stock markets. Amidst sovereign risk spreading, foreign investors pulled capital out of the market, thus putting UAE under liquidity pressure. Subsequently, the real estate crash impacted loans which led to expatriates leaving the country and corporations suffering from project