Dubai, UAE – 2023 began with a banking crisis in the US and then Europe, where several banks collapsed and faced difficulties paying their depositors.
Due to the GCC’s strong linkages with the global banking system, concerns have risen that the banks in the region will face the same struggles.
In a Twitter poll, TRENDS sought the opinion of its followers regarding the vulnerability of GCC banks in light of the banking crisis affecting the United States and Western Europe. The poll question asked: Are GCC banks under threat from the banking crisis in the United States and Western Europe?
The majority seemed worried and voted Yes (38 percent), while 30 percent voted No, 17 percent voted I don’t know, and only 15 percent voted Maybe.
Most poll voters were male (74.2 percent).
The distribution of voters by age group was 20-29 years (42.9 percent), 30-39 years (39.4 percent), 40-49 years (12.4 percent), above 50 years (5.3 percent)..
77.7 percent of the votes were from Egypt, 9.5 percent from Kuwait, 5.9 percent from Lebanon, 5.6 percent from Qatar, 0.6 percent from Saudi Arabia, and 0.6 percent from the other countries.
In contrast, a recent report revealed that the leading US banks could weather the storm that shook the banking sector violently last March, as the quarterly results showed unexpected profits despite the rise in interest rates, which has improved the banks’ credit margins. This shows a positive future for the GCC banks as well.
Moreover, the French newspaper “Le Figaro” published a report stating that Goldman Sachs – which has a strong presence in investment banking services – alone bore the brunt of the crisis in the merger and acquisition market and the volatility of financial markets between January and March. As a result, its net profit fell 19 percent to $3.1 billion.
The report showed that companies and other giant banks on Wall Street benefited greatly from the banking crisis and the bankruptcy of Silicon Valley Bank, Signature Bank, and Silvergate Bank.
Regional US banks were in turmoil after a run on deposits hit Silicon Valley Bank and several other lenders. After rising interest rates drove down the value of the bonds they had bought when interest rates were low, a sudden increase in client withdrawals forced some of them to sell those assets at a loss.
The collapse of Silicon Valley Bank (SVB) in March was also linked to increases in interest rates.
