Monday, Aug 29, 2011
Dubai: Banks in the GCC and wider Middle East are adequately capitalised to meet the fallout from a global economic slowdown or a double-dip recession, according to analysts.
Christine Lagarde, the new managing director of the International Monetary Fund (IMF) on Sunday warned that the world economy is in a dangerous phase and that officials should take new steps to strengthen growth. She called on European authorities to boost capitalization levels of European banks to prevent the sovereign debt crises of some countries from infecting more countries.
While calling on European banks to fortify their capital bases, Legarde said that decoupling between emerging economies and developed economies is a myth and warned that if the advanced countries succumb to recession, the emerging, markets will not escape.
Commenting on the IMF chiefs warnings, analysts said the Middle Easts banking sector in general and the GCCs banking sector in particular are better prepared for a global economic slowdown.
We continue to believe the Middle East and North Africa [Mena] banks are well capitalized, and are in a much better shape than US and European banks, said Jaap Meijer, Head of Banks Research at HC Securities
We estimate Qatar banks will have core equity Tier-1 capital in the range of 12.5 per cent to 23 per cent next year, Egypt banks in the range of 13 to 15 per cent, Saudi banks 13.5 per cent to 15.8 per cent, Lebanese banks 9.1 per cent to 12.4 per cent and UAE banks 8.7 per cent to 16.5 per cent, he said
GCC banks in general have high capitalisation levels exceeding the Basel II requirements and in many cases the regulatory capital requirements are above the Basel III requirements.
By Babu Das Augustine, Deputy Business Editor
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