Gulf Arab banks will have an opportunity to boost their lending in 2012, as they enjoy relatively healthy capital ratios compared with their international peers, though growth in their loan books will be contained by concerns about continuing debt restructurings and worries about the global economy, analysts said.
As a result of the sovereign debt crisis in Europe, many international banks are reducing their exposure to emerging markets, including the Middle East. An estimated 50 per cent of bank lending in the Gulf is carried out by international lenders and their retreat offers local banks a chance to reverse several years of sluggish loan growth that followed the financial crisis in 2008 and the collapse of local real estate markets.
"The key challenge is for regional banks to fill the gap in the market left by international banks currently more focused on their home markets as a result of the global financial crisis and Eurozone debt issues," said Jon Breach, partner at BDO Corporate Finance, a financial advisory firm.
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