Gulf banks are at risk of being exposed, directly or indirectly, to the region’s booming equity and real estate markets, warned a recent report published recently by Standard & Poor’s, the international credit rating agency.
Asset price inflation in the two classes, indicated the report, is partially due to high oil prices; repatriation of some funds invested abroad; improved regional stability; some structural economic and financial reforms; renewed confidence and investment opportunities in the region.
However, more disturbingly, “it is also partially an artificial bubble that can deflate or burst - an unlikely, worst-case scenario that could nevertheless result from a regional political crisis or major oil price collapse, for example.”
Saudi Arabia, Kuwait and the UAE are the markets most at risk, the erport added.
