LONDON - The Dubai media office said on its official Twitter account late on Friday that Dubai denied being in talks with Abu Dhabi for support from the latter’s state fund Mubadala due to the impact of the coronavirus pandemic on its economy.
Sources familiar with the matter told Reuters that the governments of Abu Dhabi and Dubai were discussing ways to prop up Dubai's economy by linking up assets in the two emirates, with Mubadala likely to play a key role in any deal.
One of the sources said any support from Abu Dhabi agreed now would be "orchestrated through mergers of assets where Abu Dhabi and Dubai compete directly or where they have joint ownerships".
"The most likely deal to happen in the near term is a merger of the local stock markets," the source said, adding that bank mergers were also possible.
A second source confirmed the talks and said Mubadala, which manages around $230 billion in assets, would make "a big move into Dubai", but gave no details.
The Government of Dubai denied Reuters’ claims.
“Reuters published a story without further investigating the accuracy of this claim and verifying the trustworthiness of its source,” tweeted Dubai media office.
Abu Dhabi bailed out Dubai after the 2009 financial crisis with a $10 billion government loan, which was subsequently rolled over, and $10 billion in bonds that Dubai issued to the central bank.
Mergers took place after Abu Dhabi bailed out Dubai following the 2009 crisis, during which Dubai's property market crashed, almost forcing some state-linked firms to default on billions of dollars of debt.
The UAE merged Dubai and Abu Dhabi aluminium firms to create Emirates Global Aluminium, held jointly by Mubadala and the Investment Corporation of Dubai.
Economic growth in Dubai was sluggish before the pandemic and hopes of benefiting from hosting the Expo world fair in October collapsed when the event was postponed to 2021.
The UAE said on Wednesday it would review the structure and size of its government to make it "more agile and flexible".
"We may merge ministries and alter bodies. We will make changes," UAE Vice President Sheikh Mohammed bin Rashid al-Maktoum, who is also ruler of Dubai, said following three days of virtual meetings on the country's post-coronavirus strategy.