Friday, Jan 20, 2012

By Leila Hatoum,

Of DOW JONES NEWSWIRES

(Rewrites, adding detail and background.)

ABU DHABI (Zawya Dow Jones)--Saudi Arabia's banking sector and its Kuwaiti counterpart have little or no exposure to the debt crisis in Europe, the central bank governors of both countries said Friday.

"In Saudi Arabia we have very strong balance sheets within the banking sector and the exposure to the EU crisis is limited," said Fahd Al Mubarak, head of the Saudi Arabia Monetary Agency.

Similarly, Kuwait Central Bank Governor Sheikh Salem AbdelAziz al Sabah said the banking sector in Kuwait hasn't been affected by the euro-zone turmoil.

"Not at all. No exposure... And no risk," al Sabah said.

Both governors said their countries hadn't been approached by the International Monetary Fund to boost their respective contributions to the fund.

"Many IMF members are working closely with the IMF on this matter... and the IMF has not requested from us [to increase] our contribution," Al Mubarak said, referring to IMF plans to boost its resources via members' contributions. "We haven't been approached by anyone in this regard," al Sabah added.

IMF officials said Wednesday the fund sees a need for an extra $500 billion to $600 billion to help address the European debt crisis, and that it expects countries, including Japan and China, to help out.

Although al Sabah said his country "doesn't really invest in European sovereign bonds," his Saudi counterpart didn't deny the possibility of investing in such bonds or those issued by the European Financial Stability Facility, despite the recent sovereign debt downgrade of nine euro-zone countries by Standard & Poor's Corp.

"SAMA manages the government reserves in a very conservative and prudent way. We don't talk about any specific projects or timing. All issues are considered, ratings and fundamentals in evaluating any instrument.." said al Mubarak.

"We wish that they [Europeans] are able and we hope they resolve these issues," he added, answering a question on whether the European Union has done enough to combat the crisis.

-By Leila Hatoum, Dow Jones Newswires; +971-4-446-1686; leila.hatoum@dowjones.com

(END) Dow Jones Newswires

20-01-12 1343GMT