Dubai's decision to ask creditors of state-owned Dubai World to postpone calling in their debts sent shockwaves through financial markets across the world.
Investors have dumped shares in Asian builders and banks as fears of a second global credit crisis stalk the globe.
Affected banks include Abu Dhabi Commercial Bank, which may be owed as much as $1.9 billion by Dubai World, reports Bloomberg.
Meanwhile HSBC, Europe's largest bank, dropped more than seven per cent in Hong Kong trading, with Goldman Sachs analysts estimating that it may be set for credit losses of around $611 million from the restructuring of Dubai World's debts.
However, it was stressed by the analysts that such a debt loss would be "manageable" for HSBC.
Problems have been sparked in Dubai by the end of the property boom in the country due to the financial crisis.
Dubai borrowed $80 billion over four years to build numerous skyscrapers, hotels and luxury apartments.
But property prices have dropped 50 per cent from their 2008 levels during this year.
Earlier this week, it was revealed that British construction companies are chasing up around $330 million worth of unpaid debts in the United Arab Emirates, with the majority of the money in Dubai.
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