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
  • Joint venture wins Riyadh data centre construction deal

    6 October 2026

     

    Register for MEED’s 14-day trial access 

    Egyptian contractor Hassan Allam Construction and India’s Sterling & Wilson have won an estimated SR750m ($200m) contract to build the first phase of a data centre project in Riyadh.

    The first phase will have an IT load capacity of 16.2MW, with overall capacity reaching 50MW in the second phase.

    The scope includes civil, architectural, and mechanical, electrical and plumbing (MEP) works, infrastructure works and other associated works.

    Upon completion of both phases, the facility will comprise one 5MW standard-density hall and four high-density halls, each rated at 11.2MW.

    Saudi Arabian artificial intelligence (AI) firm Humain and Center3 – the digital infrastructure subsidiary of local telecom company STC Group – are jointly developing the project.

    The first phase is scheduled to take 16 months.

    In December last year, Center3 and Humain partnered to develop and operate AI-focused data centres across Saudi Arabia, with a planned capacity of up to 1GW.

    The partners said the first phase will deliver up to 250MW of capacity, designed for high-density AI workloads and large-scale model training.

    The venture combines Center3’s data centre operations and regional connectivity with Humain’s full-stack AI capabilities, with the latter responsible for aligning facility design with advanced compute requirements and future architectures.

    The companies said the programme will deliver purpose-built facilities engineered for high power density, low latency and resilient operations, to support large language models and other mission-critical AI applications.

    They added that the initial schemes will serve as a template for subsequent rollouts as capacity scales towards the 1GW target.

    READ THE OCTOBER 2026 MEED BUSINESS REVIEW – click here to view PDF

    Industry and logistics drive development at Neom; Saudi Arabia’s investment priorities realign amid conflict; MEED’s 2026 power developer ranking.

    Distributed to senior decision-makers in the region and around the world, the October 2026 edition of MEED Business Review includes:
    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/20298893/main.jpg
    Yasir Iqbal
  • Contractors prepare bids for eight Libyan oil and gas tenders

    6 October 2026

     

    Contractors are preparing bids for eight tenders issued by Arabian Gulf Oil Company (Agoco), a wholly owned subsidiary of Libya’s state-owned National Oil Corporation (NOC), which operates several fields including Sarir, Messla and Nafoura.

    Tender 1 is for the supply and installation of a crude oil sedimentation tank at a site known as Complex 2 in the Sarir field. The scope also includes installation of associated utilities and a gas extractor.

    Tender 2 is for an electrical interconnection project to supply the Sinawon field, located in the Nalut region of western Libya. The scope includes infrastructure to connect the field to the General Electricity Company of Libya (Gecol) grid.

    Tender 3 covers mechanical tie-ins to connect four wells at the Nafoura field to existing infrastructure: G-322, G-332, K-10 and K-11.

    The bid deadline for the first three tenders is 12.30pm local time on 8 November 2026.

    Tender 4 is also for four mechanical well tie-ins at the Nafoura field: G-315/51, K-12/51, K-13/51 and Y-651.

    Tender 5 is for connecting four wells to the electrical grid at the Nafoura field: G-315HR/51, K-12/51, K-13/51 and Y-6/51.

    Tender 6 is for flowline well tie-ins at the Messla and Majid fields. Flowlines from wells VV-7/65 and VV-6/65 at Messla will be tied in, along with the flowline from well Z-8HR/80 at Majid.

    Tender 7 covers connecting five wells to the electrical grid at the Messla and Majid fields: VV-6/65, VV-7/65, Z-8HR, Z-6HR and A-03.

    The bid deadline for the fourth, fifth, sixth, seventh and eighth tenders is 12.30pm local time on 25 October 2026.

    Increasing interest

    International oil companies are showing increased interest in oil and gas assets in North Africa as the Strait of Hormuz crisis continues to erode the appeal of investing in some of the Middle East’s biggest oil and gas producers.

    Over recent months, the chief executive of the Italian oil company Eni, Claudio Descalzi, said the company plans to drill 230 new oil and gas wells in Egypt in an effort to increase production in the country.

    The US oil and gas company Chevron also signed a production sharing agreement with Libya’s National Oil Corporation for onshore Block S4, which covers an area in the Sirte Basin.

    In addition, companies that have been engaging in recent talks focused on expanding their presence in North Africa include France’s TotalEnergies and US-based ConocoPhillips, as well as London-headquartered Shell and BP.

    The uptick in interest in North African oil and gas assets comes amid continued disruption to shipping through the Strait of Hormuz, a key export route for some of the Middle East’s biggest oil and gas exporters.

    Flows through the Strait have been disrupted by a regional war that was triggered by US and Israeli attacks on Iran on 28 February.

    Countries negatively impacted by the disruption include Kuwait, Iraq, Saudi Arabia, the UAE and Qatar.

    Amid the ongoing disruption to oil and gas exports from these countries, some North African officials have promoted their oil and gas sectors as reliable alternative suppliers.

    In August, Libya’s Oil and Gas Minister Khalifa Abdel Sadig told a conference in Norway that Libya could be a “key player in providing energy security solutions” to the European Union.

    READ THE OCTOBER 2026 MEED BUSINESS REVIEW – click here to view PDF

    Industry and logistics drive development at Neom; Saudi Arabia’s investment priorities realign amid conflict; MEED’s 2026 power developer ranking.

    Distributed to senior decision-makers in the region and around the world, the October 2026 edition of MEED Business Review includes:
    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/20298072/main.jpg
    Wil Crisp
  • Alstom wins $515m Riyadh metro trains deal

    5 October 2026

    French rail transport group Alstom has signed a €460m ($515m) contract with the Royal Commission for Riyadh City (RCRC) to supply additional driverless trains for the Riyadh Metro and integrate them into the existing network infrastructure.

    According to a notice published by Alstom on its website, the order covers extra rolling stock for lines 3, 4 and 6, including the Orange Line (Medina Road corridor), Yellow Line (King Khalid International Airport Road corridor) and Purple Line (Abdulrahman Bin Auf Road-Sheikh Hassan Bin Hussein Road corridor).

    Alstom said the additional trains will increase passenger capacity and support more frequent services to meet rising demand.

    The company will also maintain the new trains under the existing operations and maintenance contract for the three lines.

    The contract follows Alstom’s delivery of 116 driverless trains for the Riyadh Metro network, which has carried more than 100 million passengers since it opened to the public in late 2024.

    The network spans 176 kilometres, with six lines and 85 stations. Signature architects designed four stations.

    MEED’s October 2026 report on Saudi Arabia includes:

    > COMMENT: Saudi projects hold steady
    > GOVERNMENT: Riyadh looks to reset its regional defence outlook
    > ECONOMY: Conflict bolsters case for Saudi economic diversification
    > BANKING: Saudi lenders readjust to lower lending and deposit climate
    > UPSTREAM: Aramco upstream spending gathers pace
    > DOWNSTREAM: Sabic steps up Saudi petchems investment
    > POWER: Saudi Arabia’s power award activity slows
    > WATER: Saudi water sector hits sharp slowdown
    > CONSTRUCTION: Saudi construction defies the headwinds
    > TRANSPORT: Saudi infrastructure pushes forward amid conflict
    > DATABANK: Saudi data indicates project spending shift

    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/20271885/main.jpg
    Yasir Iqbal
  • Rabigh 2 IPP expansion secures $2.58bn financing

    5 October 2026

    Saudi Arabia’s Rabigh 2 combined-cycle gas-turbine (CCGT) independent power project (IPP) expansion has reached financial close.

    In a disclosure to the Saudi Exchange, Acwa said it had secured SR9.69bn ($2.58bn) in long-term financing for the project, which has a generation capacity of 2,313.5MW.

    In April, MEED reported that Acwa and Saudi Energy (formerly Saudi Electricity Company) had signed a 31-year power purchase agreement (PPA) with Saudi Arabia’s principal buyer, Saudi Power Procurement Company (SPPC), for the project.

    The project involves developing a CCGT plant in the Mecca region. It is being developed by Al-Morjan Two Electricity Company, with Acwa and Saudi Energy each owning a 40% stake in the project.

    The contract is valued at SR11.5bn ($3.07bn), the companies said in separate stock exchange filings at the time. The carbon-capture-ready power plant will be implemented under a build, own and operate contract.

    The financing has a tenor of about 34 years and was provided by a consortium of local, regional and international lenders.

    The lenders are:

    • Abu Dhabi Commercial Bank
    • Alinma Bank
    • Boubyan Bank
    • China Minsheng Banking Corporation, Hong Kong Branch
    • Commercial Bank of Dubai
    • HSBC Bank Middle East
    • Industrial and Commercial Bank of China
    • Industrial Bank, Beijing Branch
    • National Bank of Greece, Cyprus
    • Riyad Bank
    • Saudi Awwal Bank
    • Saudi National Bank
    • Standard Chartered Bank, Taiwan
    • Sumitomo Mitsui Trust Bank, London Branch

    The project scope also includes financing and expanding a 380kV electrical substation.

    According to regional project tracker MEED Projects, construction works have commenced on the project, and a joint venture of Egypt’s Elsewedy Electric and China’s Sinohydro has been working as the main contractor.

    Rabigh 1 extension

    In January, Saudi Energy announced a separate energy conversion agreement with SPPC for the purchase of electricity from the Rabigh 1 power plant expansion.

    The contract is valued at SR5.33bn ($1.42bn).

    It covers the development, financing, construction, ownership and operation of the gas-fired power plant, which will have a generation capacity of 1,179MW.

    A joint venture of Elsewedy Electric and Germany’s Siemens Energy is undertaking the engineering, procurement and construction work for the project, which is expected to be completed by the end of 2026.

    US/India-based Synergy Consulting is the financial advisory consultant to Saudi Energy on this project.

    Acwa also recently started initial commercial operations at the Taiba 1 and Qassim 1 CCGT power plants, as reported by MEED.

    The plants have a combined generation capacity of about 3.8GW and are two of four projects procured under the first round of Saudi Arabia’s gas-fired IPP programme by SPPC.

    A team of Saudi Energy and Acwa won the contract to develop and operate the projects in 2023.

    MEED’s October 2026 report on Saudi Arabia includes:

    > COMMENT: Saudi projects hold steady
    > GOVERNMENT: Riyadh looks to reset its regional defence outlook
    > ECONOMY: Conflict bolsters case for Saudi economic diversification
    > BANKING: Saudi lenders readjust to lower lending and deposit climate
    > UPSTREAM: Aramco upstream spending gathers pace
    > DOWNSTREAM: Sabic steps up Saudi petchems investment
    > POWER: Saudi Arabia’s power award activity slows
    > WATER: Saudi water sector hits sharp slowdown
    > CONSTRUCTION: Saudi construction defies the headwinds
    > TRANSPORT: Saudi infrastructure pushes forward amid conflict
    > DATABANK: Saudi data indicates project spending shift

    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/20270643/main.jpg
    Mark Dowdall
  • Dubai announces $490m e-commerce hub expansion plan

    5 October 2026

    Dubai CommerCity has launched a second expansion phase valued at more than AED1.8bn ($490m), adding over 91,000 square metres (sq m) of office, retail and logistics space across the free zone’s business, social and logistics clusters.

    Dubai CommerCity is a joint venture of Dubai Airport Free Zone Authority (Dafza) and Dubai government-owned Wasl Asset Management Group.

    The expansion is scheduled for delivery between the first quarter of 2027 and the fourth quarter of 2028.

    The developer said the move builds on sustained demand at Dubai CommerCity, where occupancy has reached nearly 96% across its office, logistics and retail assets.

    Phase two will comprise a series of developments across Dubai CommerCity’s three districts: the Business Cluster, Logistics Cluster and Social Cluster.

    The Business Cluster comprises 13 office buildings with a total leasable area of 108,000 sq m. The Logistics Cluster consists of 84 logistics units with a leasable area of 68,000 sq m, while the Social Cluster features art galleries, restaurants and cafes. The development will also include 4,000 parking spaces.

    Dafza and Wasl Asset Management Group announced plans to develop the AED2.7bn ($735m) e-commerce free zone In 2017. 

    READ THE OCTOBER 2026 MEED BUSINESS REVIEW – click here to view PDF

    Industry and logistics drive development at Neom; Saudi Arabia’s investment priorities realign amid conflict; MEED’s 2026 power developer ranking.

    Distributed to senior decision-makers in the region and around the world, the October 2026 edition of MEED Business Review includes:
    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/20270228/main.jpg
    Yasir Iqbal