Lending in Gulf plunges as banks play it safe

International banks stress their commitment to the Gulf region and local houses insist they will continue to lend to support sagging economies, but syndicated lending has nonetheless plunged this year.

So far this year, only $22.8bn of syndicated loans, project finance and bonds have been issued in the Middle East, down from $85.5bn last year and a peak of $126.9bn in 2007, says Dealogic, a data provider.

The slump is understandable. International banks are under pressure from investors to cut lending, and many governments want their banks to favour the home market, rather than the Middle East.