meed-logo

line1 line2 line3
SIGN IN / REGISTER

GCC banks navigate Credit Suisse fallout

31 March 2023

 

Saudi National Bank chairman Ammar al-Khudairy’s abrupt resignation on 27 March capped a turbulent few weeks for the world’s financial system. This period saw the kingdom’s champion bank dragged into the harsh glare of the global spotlight and serious questions asked about Gulf financial institutions’ readiness to serve as props in an increasingly jumpy financial order.

A short sentence uttered in an interview by a senior Saudi banker precipitated the collapse of a 160-year-old institution. Ruling out extending beyond its 10 per cent stake as it would entail a higher capital cost led to the fellow Swiss bank UBS buying the troubled lender at a steep discount.

Al-Khudairy took the rap for what was deemed an avoidable crisis, in which SNB took a hosing: it bought the Credit Suisse stock at CHF3.82 ($4.2) a share; UBS has paid just CHF0.76 ($0.83) a share.

The pain goes wider than SNB and the Qatar Investment Authority (QIA), the other Gulf institution directly impacted by Credit Suisse’s troubles, given its 6.9 per cent stake in the lender.

The crisis poses serious questions about the role of wealthy Gulf institutions in a global system that is increasingly reliant on them, but has yet to stress test the relationship.

On the one hand, Gulf investors have been spooked about their exposure to venerable banking institutions that were once seen as copper-bottomed plays. Conversely, Western banks may now legitimately ask whether their Gulf counterparts are reliable partners in a crisis.

Volatile landscape

The backdrop is one of wider concern about the health of global financial markets. The Credit Suisse crisis was prefaced by US regulators shutting Silicon Valley Bank (SVB) on 10 March, following mass withdrawals of customer deposits.

For now, analysts caution against panic. First, SNB’s exposure – and that of other prominent Gulf lenders – appears limited.

“The impact of SNB’s investment in Credit Suisse and the subsequent takeover by UBS on SNB are limited because the initial investment represents less than 2 per cent of SNB’s investment portfolio and 70-80 bps of the bank’s risk-adjusted capital ratio,” says Mohamed Damak, senior director, Financial Institutions Ratings, at ratings agency S&P.

As to problems in the Western markets, again, exposures are manageable. “On average, banks we rate in GCC had exposure to the US of 4.6 per cent of assets and 2.3 per cent of liabilities at year-end 2022,” says Damak.

“Generally, GCC banks would have limited lending activity in the US and most of their assets there would be in high-credit quality instruments or with the Federal Reserve. The exposure to Europe tends to be limited as well, except for banks that have a presence in some European countries like France or the UK. Most of the activity in these jurisdictions tends to be linked to home countries or generally made of high-quality exposures.”

This will not end SNB shareholder anxiety that the bank’s raison d’etre – supporting domestic projects related to Vision 2030 – had been sidelined in the pursuit of equity positions in global blue chips.

Qatari contagion

Similar questions will be asked in Qatar, where the QIA provided ballast for the Swiss bank’s balance sheet in 2021, when it issued $2bn in convertible notes. The Qatari wealth fund will be reviewing its bank holdings and stress-testing its wider portfolio.

Others will do the same. “Gulf sovereign wealth funds will probably review their asset allocations, regardless of this current crisis,” one Gulf-based economist tells MEED. “The reality is that their role is changing. They were, in the past, more opportunistic investors. Today they are becoming strategic vehicles.”

If Gulf funds like QIA will no longer serve as the global financial system’s white knights – as they proved in the 2008 financial crisis – this may prompt a reconfiguration of investment strategies.

There will be a steep learning curve, says one Gulf-based economist – on both sides.

Governance implications

In light of the growing financial strength of the Gulf institutions come new responsibilities and governance requirements, reflecting the dawning reality that Gulf institutions are growing into increasingly globally systemically significant investors or sources of capital.

“They need to act accordingly,” says the economist. “Not just from the global governance perspective, but also from the perspective of protecting their assets.”

Gulf institutions’ transformation into opportunistic investors was well-timed when liquidity was required at short notice.

“The money centres of the world turned to one of the biggest honey pots they could identify. And, of course, some of the old reservations were conveniently parked aside, at least for the time being,” says the economist.

The challenge for the Gulf institutions was the lack of deep experience or institutional frameworks needed to underpin those initial investments.

“Opportunities arose, these countries chose to take them and they got lucky because they helped stabilise the global financial system, and they helped protect the reputation of these institutions. And no major mistakes were made. But that initial opportunistic approach will no longer fly,” says the economist.

Gulf sector outlook

The Credit Suisse saga has also prompted much ruminating in Western media to the extent that Western institutions may cast a more wary eye in future over their Gulf counterparts.

But absent new funding sources, the GCC's appeal may prove irresistible to them. After all, says the economist, beggars can’t be choosers.

“What is the alternative to resorting to institutions such as the Gulf sovereign funds? They’re not going to go to China, that’s for sure. The only real alternative is to get some sort of a backstop from national central banks. And that is pretty much as close as you can get to a moral hazard,” he says.

The broader global picture is evolving. How Gulf institutions related to primarily Western institutions will also be influenced by the change in the GCC states’ foreign policy.

Gulf governments are increasingly cognisant of the need for a balanced, multi-directional foreign policy. And that is something they will also want to reflect in their wealth funds and banks’ investment behaviour.

The next year should provide an insight into how the post-Credit Suisse modus vivendi will play out.

https://image.digitalinsightresearch.in/uploads/NewsArticle/10724320/main2803.jpg
James Gavin

Register for MEED's guest program now to access this article.

Click here to register
Exclusive from Meed
Related Articles
  • Algeria extends bid deadline for stalled power plant

    30 April 2026

    Algeria’s state-owned electricity and gas utility Sonelgaz has extended a deadline for contractors to submit expressions of interest for the construction of the 1.2GW Djelfa combined-cycle power plant.

    The project is being procured through Sonelgaz’s power generation subsidiary, Societe Algerienne de l’Electricite et du Gaz – Production de l’Electricite (SPE).

    In March, MEED reported that the utility was seeking contractors to complete works at the existing Djelfa plant, including the remaining construction, the supply of missing equipment and the assessment of installed equipment.

    The original bid submission deadline for prequalification was 7 April. The new deadline is 5 May.

    The tender is open to both local and international companies, and will be conducted in three phases: prequalification, preliminary technical assessment, and final technical and financial submission.

    The retender follows earlier plans to complete the project through a Chinese consortium comprising China Energy Engineering Group Company, Northwest Electric Power Design Institute and Anhui Electric Power Construction Company.

    This proposal was made after Spanish contractor Duro Felguera halted work on the project in June 2024. 

    According to MEED Projects, construction works had progressed to 72% at the time of the suspension.

    It is understood that an agreement in principle was then reached to transfer the remaining works to the Chinese group after the Spanish firm entered a pre-bankruptcy phase in December 2024.

    A company statement at the time said: “The Chinese group is committed to completing the plant construction, with commissioning scheduled to start in the ninth month following the final agreement.”

    However, in October 2025, it was revealed that the attempt to transfer the project to a consortium of Chinese companies had failed, leaving the Spanish firm with an official demand to pay €413m in compensation to Sonelgaz.

    This was revealed via a lengthy report containing a restructuring plan sent by Duro Felguera to creditors in Spain and the Madrid Financial Markets Authority.

    Gas-fired power plants

    Located in Djelfa province, the project remains a key part of Algeria’s power generation expansion plans.

    Sonelgaz has been seeking contractors to build a separate 1.2GW combined-cycle gas-fired power plant in Aldrar since last April.

    The most recent deadline extension was 29 April.

    According to recent reports, Algeria has also begun construction of a power generation plant in El-Aouinet, with a total installed capacity of 1,406MW.

    The combined-cycle gas turbine plant is being developed in partnership with China National Electric Engineering Company.

    Gas-fired combined-cycle plants continue to account for the majority of Algeria’s electricity generation capacity. Data from MEED Projects indicates that more than 5,000MW of oil- and gas-fired power capacity is currently in the execution phase.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/16623787/main.jpg
    Mark Dowdall
  • Dewa announces new record for power reliability

    30 April 2026

    Dubai Electricity & Water Authority (Dewa) has announced that it set a new world record for the lowest electricity customer minutes lost (CML), at 0.82 minutes a year in 2025.

    The figure is equivalent to about 49 seconds of annual outage per customer. It improves on the utility’s previous record of 0.94 minutes in 2024, a reduction of around 13%.

    Dewa said it has reduced CML in Dubai from 6.88 minutes a year in 2012 to 0.82 minutes in 2025, significantly lower than the average of about 15 minutes recorded by leading electricity utilities in the European Union.

    The smart grid is a central component of Dewa’s strategy to improve reliability and efficiency. The programme is being implemented with total investments of AED7bn up to 2035.

    One of the key initiatives of the programme is the Automatic Smart Grid Restoration System, which enables remote, round-the-clock control and monitoring.

    Dewa currently has tenders out for several power and water infrastructure projects in the emirate. These include at least four Glass Reinforced Epoxy (GRE) water transmission pipeline projects.

    According to regional projects tracker MEED Projects, Dewa awarded $1.1bn-worth of new power and water contracts in 2025. Contract awards had previously reached $2.6bn in 2024, and $4bn in 2024.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/16623721/main.jpg
    Mark Dowdall
  • Riyadh tenders PMC deal for major sports arena

    30 April 2026

     

    Saudi Arabia’s Sports Boulevard Foundation has tendered a contract inviting firms to bid for project management consultancy (PMC) services for the Global Sports Tower in the Athletics District of the Sports Boulevard development in Riyadh.

    The tender was issued on 8 April, with a bid submission deadline of 10 May.

    The 130-metre-tall Global Sports Tower will cover an area of 84,000 square metres and will include more than 30 sports facilities. The tower will feature the world’s tallest indoor climbing wall at 98 metres and a 250-metre running track.

    Earlier this week, MEED reported that the Sports Boulevard Foundation is preparing to award the main construction contract for the Global Sports Tower. MEED understands that bid evaluation has reached an advanced stage and the contract is likely to be awarded by the end of May.

    MEED reported in May last year that design work on the tower had been completed. Saudi Arabia’s Crown Prince Mohammed Bin Salman Bin Abdulaziz Al-Saud approved the designs in 2024.

    The Sports Boulevard development runs across Riyadh from east to west and, once complete, is set to be the world’s longest park spanning more than 135 kilometres.

    The development will be spread across several districts, including Wadi Hanifah, Arts, Urban Wadi, Entertainment, Athletics and Eco, as well as Sands Sports Park.

    The large-scale project aims to transform central Riyadh – currently dominated by major highways – into a recreational corridor.

    Sports Boulevard, which will feature 4.4 million sq m of public realm and landmark buildings, will also be home to the Centre for Cinematic Arts and a 2,000-seat amphitheatre.

    The development will provide more than 2.3 million sq m of mixed-use commercial, residential, and retail assets, along with sports facilities around the park, known as Linear Park.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/16622287/main.jpeg
    Yasir Iqbal
  • Contractors submit Saudi Arabia phosphate rail track bids

    30 April 2026

     

    Saudi Arabian Railways (SAR) received bids from contractors on 27 April for a multibillion-riyal tender to double the tracks on the existing phosphate transport railway network connecting the Waad Al-Shamal mines to Ras Al-Khair in the kingdom’s Eastern Province.

    The tender – covering the second section of the track-doubling works and spanning more than 150 kilometres (km) – was issued on 9 February.

    This follows SAR receiving bids on 1 February for the project’s first phase, which spans about 100km from the AZ1/Nariyah Yard to Ras Al-Khair.

    The scope includes track doubling, alignment modifications, new utility bridges, culvert widening and hydrological structures, as well as the conversion of the AZ1 siding into a mainline track. It also includes support for signalling and telecommunications systems.

    The tender notice was issued in late November.

    Switzerland-based engineering firm ARX is the project consultant.

    MEED understands that these two packages are the first of four that SAR is expected to tender for the phosphate railway line. Other packages anticipated to be tendered shortly include the depot and systems packages.

    In 2023, MEED reported that SAR was planning two projects to increase its freight capacity, including an estimated SR4.2bn ($1.1bn) project to install a second track along the North Train Freight Line and construct three new freight yards.

    Formerly known as the North-South Railway, the North Train is a 1,550km-long freight line running from the phosphate and bauxite mines in the far north of the kingdom to the Al-Baithah junction. There, it diverges into a line southward to Riyadh and a second line running east to downstream fertiliser production and alumina refining facilities at Ras Al-Khair on the Gulf coast.

    Adding a second track and the freight yards will significantly increase the network’s cargo-carrying capacity and facilitate increased industrial production. Project implementation is expected to take four years.

    State-owned SAR is also considering increasing the localisation of railway materials and equipment, including the construction of a cement sleeper manufacturing facility.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/16622526/main.jpg
    Yasir Iqbal
  • Iraq sets up commission for $5bn pipeline project

    30 April 2026

    Iraq is setting up a high-level commission to oversee the development of the planned $5bn Basra-Haditha crude oil pipeline project.

    The decision was made at a meeting held on 26 April, attended by Prime Minister Mohammed Shia Al-Sudani and the Minister of Petroleum Hayyan Abdul Ghani Al-Sawad, as well as other officials and consultants.

    The commission will be chaired by the undersecretary of the Oil Ministry and include advisers to the prime minister, along with director-generals from the Oil Ministry and the Industry & Minerals Ministry.

    Al-Sudani said the pipeline project will increase flexibility in transporting crude oil to the Turkish port of Ceyhan, as well as the Syrian port of Baniyas and Jordan’s port of Aqaba.

    The pipeline is also expected to strengthen supply to refineries in central and northern Iraq and support higher domestic refining output.

    The meeting also approved allocating $1.5bn to the project this year, with funding provided through the Iraq-China oil-for-infrastructure mechanism, according to a statement issued by the Petroleum Ministry.

    Earlier this month, Iraq’s Council of Ministers approved amendments allowing the Oil Ministry to directly invite specialised companies to bid for the 685-kilometre pipeline.

    The pipeline is expected to have a capacity of up to 2.25 million barrels a day.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/16621546/main.jpg
    Wil Crisp