GCC banks maintain strength in the face of global crises

By Ribal Dayekh in Dubai
For Al-Shorfa.com
2010-02-06

[KARIM SAHIB/AFP/Getty Images] The value of bank deposits in GCC countries increased by 2.1%

A report issued by Camco Investment Company last week stated that since the financial crisis began in September 2008, banks in the Gulf region demonstrated their financial strength and their ability to withstand financial crises.

The report indicated that the total value of bank deposits in the Gulf Cooperation Council (GCC) countries increased slightly by 2.1%, reaching $740 billion at the end of September 2009, compared to $725 billion at the end of 2008. Before the economic downturn began, banks witnessed record growth rates over the past five years averaging about 27%.

The report indicated that the confidence of banks in the local institutions and companies during that period was instrumental in supporting real estate companies by financing real estate and infrastructure projects and providing the necessary liquidity to investment firms and individual investors.

However, this optimistic outlook on the markets was not shared by the investment bank Shuaa Capital, which published a report about investors' confidence in GCC economies, showing a decrease by 2.4 points in December. The report anticipated that all economic sectors in the GCC would realize higher levels of profit, especially telecommunications.

In Saudi Arabia, HSBC Group released a study titled "World Confidence Index in Small Enterprises" which surveyed more than 6,000 institutions in the major markets in the kingdom. The study found that 86% of 300 Saudi companies believe that the Saudi economy is growing at the same rate or faster than the current rate. More than half of the institutions expect a growth rate of at least 4% in the next 12 months while only 14% said the economy could slow down.

In Bahrain, the Bahrain Stock Exchange stopped trading Gulf Finance House (GFH) shares temporarily after news reports surfaced about the bank’s intention to reschedule its debt payment of $300 million.

However, the bank issued a statement saying it entered into negotiations with West LB Group in London, which is responsible for the loan, and comprises 32 banks. An agreement was reached to offer credit facilities worth $300 million to the bank.

Last October, GFH borrowed $300 million to prop up its finances after incurring major losses the previous year.

On February 2nd, the Kuwait National Assembly approved a 30 billion Kuwait dinar ($104.3 billion) four-year development plan, which will extend until 2014. The plan includes investments in order to increase oil and gas production. It also has provisions for reducing reliance on the oil sector. The plan calls for private sector participation in government projects, which is expected to attract foreign investment to Kuwait.

In Cairo, the monthly report issued on January 31st by the Centre for Information and Decision-Making in the Egyptian Cabinet showed an increase in the Egyptian Central Bank’s international reserves during December by 0.03%, reaching $34.2 billion, compared to the same month of the previous year.

In Syria, construction on the Latakia-Ariha highway project developed by the Kuwaiti company Al Kharafi fell behind schedule. The Syrian Transportation Minister, Yarub Sulaiman Badr, expressed his fears that there are negative indications regarding how the Kuwaiti company is managing the project. He said steps need to be taken in order to ensure that there are no delays to the project that is scheduled to be completed by the end of summer.

In Lebanon, the Lebanese Telecommunications Minister, Charbel Nahas, stated that his ministry achieved several accomplishments in terms of investment, subscribers and revenues in the last year. He referred to the increase in the number of subscribers to 1.3 million in the beginning of 2009. The amount of money transferred to the treasury in 2009 reached $1.265 million compared to $1.242 million in 2008, an increase of $23 million. The amount of investment reached $130 million in 2009 while in 2008 it did not exceed $40 million.

Bookmarking

Please comment on this article so that we can improve the experience of viewing this website.