gulfnews : Gulf banks warned to brace for fall in European funding

Some banking systems in the GCC could face funding gaps in the event of massive deleveraging and the consequent exit of European banks from funding in the region, Moody's analysts said yesterday.
Although the economic reliance on European bank funding varies across the GCC, Moody's says that a decrease in lending by European banks to the region could lead to a short-term liquidity squeeze and, more likely, a longer-term structural shortfall. In order to meet this gap, local GCC banks would need to grow as well as adjust their own funding structures. Asian banks are also likely to be a growing source of foreign funding.
The European banks' retrenchment from the region has been prompted by the ongoing euro-area debt crisis and their need to deleverage and build up capital buffers.

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