Analysis: S&P comments on Kuwaiti banking system
As they say sometimes, too much of a good thing can be bad for you and though S&P comments on Kuwaiti Banks are positive, they highlight the issue of over-liquidity in an overly concentrated market, something that it is typical for most GCC Banks.
What is needed is real deregulation in order to permit Banks to compete on each other�s turf and invest their excess liquidity in new markets but most urgently, the need for governments to encourage M&A activity in the GCC Banking sector and the Middle East in general. This will reduce the dependency on oil and the adverse effect that lower oil prices has on the size of non-performing loans.
Taking these increasingly urgent actions should reduce the issue of over-banking in the ME and produce strongly capitalised banks that operate on commercial grounds rather than semi-nationalistic dogma.
As they say sometimes, too much of a good thing can be bad for you and though S&P comments on Kuwaiti Banks are positive, they highlight the issue of over-liquidity in an overly concentrated market, something that it is typical for most GCC Banks.
What is needed is real deregulation in order to permit Banks to compete on each other�s turf and invest their excess liquidity in new markets but most urgently, the need for governments to encourage M&A activity in the GCC Banking sector and the Middle East in general. This will reduce the dependency on oil and the adverse effect that lower oil prices has on the size of non-performing loans.
Taking these increasingly urgent actions should reduce the issue of over-banking in the ME and produce strongly capitalised banks that operate on commercial grounds rather than semi-nationalistic dogma.
posted by Double M at 12:42 PM
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