NewsMine — cabal-elite — international-banking — arabia — Viewing Item

Middle east awash with oil money for investment { May 15 2006 } Original Source Link: (May no longer be active)    http://news.ft.com/cms/s/11333c5e-e429-11da-8ced-0000779e2340.html http://news.ft.com/cms/s/11333c5e-e429-11da-8ced-0000779e2340.html Moody’s warns of risk for Gulf banks By William Wallis in Cairo Published: May 15 2006 17:07 | Last updated: May 15 2006 17:07 Moody’s, the ratings agency, has warned of a build-up of systemic risk in banks operating in the Arabian Gulf as a result of rapid loan growth and “possible asset bubbles”. A report by Moody’s to be released on Tuesday says the financial performance of Gulf banks has improved in recent years – and now compares favourably with those of higher-rated institutions in other parts of the world – thanks to booming economies underpinned by soaring world prices for oil and gas. In most cases this has made for a stable medium-term outlook. However, the agency has not awarded ratings upgrades yet because of high exposure, both indirect and direct, to volatile capital markets, as well as to “certain pockets of overvalued properties and the construction sector”. There were also concerns about over-borrowing by consumers, with most banks experiencing an increase in loan balances of more than 25 per cent for the fourth year running. “Moody’s maintains a cautious approach as we believe that the surge in economic and banking activity has also led to a build-up of new risks, which are largely systemic in nature,” said Mardig Haladjian, a general manager in Moody’s financial institutions group and author of the report. The full impact of the collapse in Gulf stock markets – Saudi Arabia’s all shares Index has halved since February – may not become clear until the end of the year when loans begin to mature. Moody’s main concern was related to lending secured by equity holdings, more than direct bank exposure to markets. “The speculative nature of trends, the huge volumes built up and the sometimes extremely high valuations of Gulf capital markets have led us to be particularly concerned about the possibility of the build-up of an asset bubble in the region,” the report said. It added that many of the banks were not able to quantify the extent to which their consumer, personal or corporate loans had been channelled to the capital markets. This made it difficult to calculate their full exposure to value deflation. On average the property and construction sectors contributed to about 15 per cent of loan portfolios across the region. There were questions about the viability of property price rises in the United Arab Emirates. Property prices have also risen sharply in Kuwait as a result of the state’s role as a hub for rebuilding Iraq. “A possible reversal in real estate values could place some banks under financial strain,” the report says. In most of the other markets, risks could build up as speculative appetite moves from the capital markets to the property markets. Moody’s expects “more but selective ratings upgrades” as the markets enter a phase of more moderate growth and lending practices be-come longer term.

Gulf states may end dollar peg kuwait says { April 2008 } Middle east awash with oil money for investment { May 15 2006 } Muslim nations plan to set up islamic bank Files Listed: 3

Correction/submissions

CIA FOIA Archive

National Security Archives

This site contains copyrighted material the use of which has not always been specifically authorized by the copyright owner. We are making such material available in our efforts to advance understanding of environmental, political, human rights, economic, democracy, scientific, and social justice issues, etc. We believe this constitutes a 'fair use' of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. For more information, go to: http://www.law.cornell.edu/uscode/17/107.shtml. If you wish to use copyrighted material from this site for purpose of your own that go beyond 'fair use', you must obtain permission from the copyright owner.