Impact of US bank failures on Gulf banking sector limited: Moody’s – Gulf Updates
Moody’s said the impact of the failures of Signature and Silicon Valley banks in the United States should be limited for most banks rated in Gulf Cooperation Council countries.
This is mainly due to the structural characteristics of these banks, including their strong business franchises and the support they receive from their governments. Furthermore, Gulf banks are not physically exposed to failing US banks, nor are they subject to large losses on the debt securities they hold to maturity. However, the indirect effects of the US banking crisis continue to develop.
The agency said banks in Gulf Cooperation Council countries are closely tied to sovereign entities. For the most part, the footprint of governments is found on the balance sheets of these banks, as these entities are among the major borrowers, depositors and shareholders, creating a supportive and interdependent operating environment.
Governments provide lending opportunities to banks of the Gulf Cooperation Council countries, which play a central role in the implementation of the program of diversification of the components of the public economy in the non-oil sectors of the economy, because they represent the bulk of lending activities supported by public spending, particularly in Saudi Arabia.
All of these factors ensure that Gulf banks will remain at the heart of the region’s economies and protect them from sudden market shocks.
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Impact of US bank failures on Gulf banking sector limited: Moody’s – Gulf Updates
