When state-owned holding company Dubai World announced it could not pay back $26bn to its creditors, Dubai’s future looked bleak. The announcement raised the spectre of the world's largest government default since the Argentine debt restructuring of 2001, causing markets to crash and oil prices to crumble. Just 18 months after the event, though, and the United Arab Emirates’ most flamboyant emirate is back on investors' radars, all keen to pick up where they left off in 2008, and their gradual return to Dubai has been in part thanks to Abu Dhabi’s role in rescuing its ailing neighbour.
For Dubai, 2009 and the early part of 2010 was a difficult time as balance sheets remained weighed down by the emirate's boom-led debts. All but one of the UAE's 41 banks suffered the worst losses in their history. It was First Gulf Bank that bucked the trend by posting profits of Dh3m ($815,920) in 2008, which increased to Dh3.31m in 2009. The other top 10 banks in the UAE, which include Emirates NBD, Mashreq and the Commercial Bank of Abu Dhabi, suffered an average 14.85% dip in profits between 2008 to 2009.