The war between Hamas and Israel is unlikely to trigger external funding outflows or pressure banking sectors in the Middle East and North Africa (MENA), S&P Global Ratings said in a new report.

This is due to the conflict remaining “mainly limited” to Israel and Gaza, the report said.

However, there may be scenarios where the conflict widens, leading more risk-averse investors to withdraw funds from the region.

S&P’s standardized assumptions expect external funding outflows to reach nearly $220 billion, or about 30% of the tested systems’ cumulative external liabilities.

“These are concentrated mainly in Qatar and the UAE, followed by the offshore banking sector in Bahrain, because of the significant gross external debt of these countries.”

S&P’s assumed external funding outflows range from a limited $3.5 billion for Oman to $22.1 billion in Saudi Arabia.

“Most banking systems can manage these outflows by liquidating their external assets, with only Qatar, Egypt, and Jordan facing deficits,” the report noted.  

(Editing by Brinda Darasha;