UK banks warn that emirate investment vehicle which borrowed £7.3bn could default on debt repayments

Fears have been raised that Dubai Holding, whose subsidiaries include developer Emaar, could be unable to repay its debts.

British banks have expressed concern that Dubai Holding, which is the personal investment vehicle of Dubai's ruler Sheikh Mohammed bin Rashid al-Maktoum, could default on payments. It is understood the company borrowed £7.3bn to invest in projects in Dubai and internationally, including the UK.

The news follows Dubai World, which owns developer Nakheel, asking for a “standstill” on $26bn of debt repayments. According to ratings agency Standard and Poor's, this equates to defaulting.

A local business man told the Sunday Times: “The government insisted all was well [in Dubai] but now we know it isn't.”