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
  • Dewa opens bids for MBR Solar Park phase seven

    3 August 2026

     

    Dubai Electricity & Water Authority (Dewa) has opened bids for the seventh phase of the Mohammed Bin Rashid Al-Maktoum Solar Park.

    According to a source, technical and financial offers were opened last month. The utility received bids on 1 July. 

    Phase seven will add 2,000MW from photovoltaic solar panels and include a 1,400MW battery energy storage system (bess) with a six-hour capacity, providing a total storage capacity of 8,400 megawatt-hours. 

    It is understood that Saudi Arabia’s Acwa, the UAE’s Etihad Water & Electricity and Abu Dhabi Future Energy Company (Masdar) are among the companies that submitted bids for the project.

    The winning bidder “is likely” to come from one of those three, a source told MEED.

    As MEED understands, the previously prequalified Electricite de France did not submit a bid for the project.

    Dewa completed the prequalification process for the latest phase of the world’s largest single-site solar park in 2025. 

    As previously reported, 47 firms submitted their responses to Dewa’s expression of interest request for the contract in March 2025. The main tender was issued last November.

    The following companies were among those prequalified to submit main contract bids on the project:

    • Acwa (Saudi Arabia) 
    • Abu Dhabi Future Energy Company (Masdar)
    • Electricite de France (EDF)
    • Etihad Water & Electricity (EtihadWE)
    • China Machinery Engineering Corporation
    • China Construction Eighth Engineering Division
    • Power China
    • Larsen & Toubro (India)
    • Shanghai Electric Group

    The transaction advisory team for the project comprises UK-headquartered Deloitte and US-based CMS and Sargent & Lundy as financial, legal and technical advisers, with Deloitte acting as lead adviser. 

    Meanwhile, construction on the 1,800MW sixth phase of the MBR Solar Park is nearing completion, with commissioning expected by the end of the third quarter.

    Dewa and Masdar reached financial close for the $1.5bn project in 2024. Once completed, the sixth phase will increase the solar park’s total production capacity to 4,660MW.

    Dewa increased its flagship solar project’s 2030 installed capacity target by 45% in 2025, from 5,000MW to 7,260MW. This comprises a total investment of AED50bn ($13.6bn).

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

    Saudi Arabia builds for the global stage; Rising uncertainty creates fresh set of challenges in the Maghreb; Gulf banks remain robust in the face of geopolitical tensions.

    Distributed to senior decision-makers in the region and around the world, the August 2026 edition of MEED Business Review includes:

    > MARKET FOCUS: Maghreb fortunes diverge
    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/18031819/main.gif
    Mark Dowdall
  • Three groups bid for $5bn Asir-Jizan highway

    3 August 2026

     

    Three groups have submitted bids for an estimated SR20bn ($5bn) contract to develop and operate the Asir-Jizan highway project on a public-private partnership (PPP) basis.

    According to sources close to the project, the consortiums that bid are:

    • Lamar Holding (local) / Shaanxi Construction Engineering (China) / Safari (local)
    • Vision Invest (local) / China Harbour Engineering Company (China)
    • Plenary (Australia) / Alayuni (local) / Limak Holding (Turkey) / Nesma & Partners (local)

    Saudi Arabia’s Roads General Authority, the National Centre for Privatisation & PPP and the Aseer Development Authority (Asda) are the government agencies managing the tender and project.

    The 136-kilometre Asir-Jizan highway will have three lanes in each direction and include six intersections, 57 bridges totalling 18km and 11 tunnels totalling 9km.

    The project is one of four planned highway schemes in the kingdom’s privatisation and public-private partnership pipeline.

    The route begins in Al-Farah in Asir and extends to the Red Sea through Jizan.

    The 30-year contract will follow a design, build, finance, operate and maintain model.

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

    Saudi Arabia builds for the global stage; Rising uncertainty creates fresh set of challenges in the Maghreb; Gulf banks remain robust in the face of geopolitical tensions.

    Distributed to senior decision-makers in the region and around the world, the August 2026 edition of MEED Business Review includes:

    > MARKET FOCUS: Maghreb fortunes diverge
    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/18031383/main1110.jpg
    Colin Foreman
  • Adnoc Onshore extends bid deadline for field facilities project

    3 August 2026

     

    Abu Dhabi National Oil Company’s onshore business (Adnoc Onshore) has given contractors extra time to prepare bids for a project to build on-plot and off-plot facilities at the Rumaitha and Shanayel fields, part of the Northeast Bab cluster of oil fields in Abu Dhabi.

    The project aims to enhance and sustain oil production at the Rumaitha and Shanayel fields at a rate of 45,000 barrels a day (b/d). It forms part of Adnoc Onshore’s contribution to parent company Adnoc Group’s broader objective of increasing oil production capacity to 5 million b/d by 2027 through its Accelerated Integrated Programme 5 (AiP5). Adnoc Group currently has a production capacity of 4.85 million b/d.

    Adnoc Onshore issued the main tender for the engineering, procurement and construction (EPC) works package for the Rumaitha and Shanayel on-plot and off-plot facilities project on 19 June, MEED previously reported.

    The project operator has now extended the deadline for contractors to submit technical bids to 5 August, from 2 August previously, according to sources. The prior deadline had been 30 July.

    Adnoc Onshore issued the expression of interest for the Rumaitha and Shanayel on-plot and off-plot facilities project in early December, with contractors submitting their responses later that month, MEED previously reported.

    The prequalification and ongoing tendering process is understood to result from Adnoc Onshore revising its strategy for executing EPC works on an earlier, larger project covering the Northeast Bab cluster, which comprises the Al-Nouf, Rumaitha and Shanayel fields.

    MEED reported in December that Adnoc Onshore had cancelled the engineering, procurement and construction management (EPCm) phase it launched in 2024 for the Northeast Bab on-plot and off-plot facilities project in favour of executing the scheme under a conventional EPC model.

    The operator awarded a contract to state-owned China Petroleum Engineering & Construction Corporation (CPECC) to carry out EPCm services for the Northeast Bab off-plot facilities package in October 2024. However, the contract was subsequently cancelled last year.

    Separately, Adnoc Onshore received bids during the second quarter of 2025 for the EPCm tender covering the Northeast Bab on-plot facilities package, but that procurement process was also later cancelled.

    Project scope of work

    The detailed scope of work on the Rumaitha and Shanayel on-plot and off-plot facilities project is as follows:

    On-plot facilities:

    • Oil train: One new oil train with slug catcher, two-stage separation, desalting, exchangers for crude heating and stabilisation, and all associated interconnections, utilities and civil/structural works, etc.
    • Produced water treatment (PWT): New produced water treatment package to enable 100% produced water reinjection (PWRI), including chemical dosing, tanks, pumps, all associated controls and blending with aquifer water, etc.
    • Water injection system: New water injection system, including surface water injection pumps, necessary connections and controls from produced water systems, headers, chemical dosing, power and controls, etc.
    • Gas handling and export:
      • Low-pressure gas compression system
      • Medium-pressure gas compression system
      • Gas dehydration and regeneration system
      • Export gas compression system
    • Utilities and offsites: Plant air and instrument air systems, nitrogen generation system, potable water system, vapour recovery system (liquid ejector package), fuel gas import and distribution, closed and open drain systems, hot oil heater, snuffing nitrogen package, enclosed ground flare systems (high-pressure and tank flares), etc.
    • Modifications in existing systems, including, but not limited to, installation of a slug catcher at phase-I, connectivity of gas systems, water systems, existing high-pressure compressors modifications, etc
    • Electrical, instrumentation and control, and safety: Electrical systems, instrumentation and control system (ICSS, F&G system, field instrumentation, HIPPS, etc.), substation and ITR room building, fire water system, etc.
    • Overhead line (220 kV): Installation and extension of overhead lines and 220 KV GIS compound or equivalent power distribution solutions to the central processing plant and other designated areas, as necessary.

    Off-plot facilities:

    • New gas-lifted oil producers and water injectors installation with necessary piping, controls, etc. and their connections to the new or existing clusters and pipeline networks
    • New clusters with facilities such as control panels, ITR, production and test manifolds, headers, chemical injection skids, multiphase flow meters, closed drain systems, HIPPS valves, WHCPs, pig traps, ICSS/telecom extensions, etc.
    • Modifications in existing clusters, including the addition or extension of manifolds, headers, additional pipelines with pig traps, ICSS/telecom extensions, chemical injection kids, etc.
    • Gathering and injection networks: Construction of new and modified oil gathering and water injection trunklines/laterals, pigging facilities (launchers/receivers), valve stations, block valves, corrosion protection and monitoring, and all associated equipment, etc.
    • Export gas pipelines and Adnoc Gas interface: Provision for export gas pipeline and facilities from Rumaitha central processing plant to new manifold station and from NMS to Adnoc Gas, including isolation/blowdown, etc.
    • Overhead line: Installation and extension of 33kV overhead lines to clusters, etc., as required.

    The tendering exercise for the Rumaitha and Shanayel on-plot and off-plot facilities project is taking place as Adnoc Onshore continues to make progress with EPC works on another, similar project to build off-plot facilities at the Southeast cluster of oil fields in Abu Dhabi, which is also integral to Adnoc Group’s AiP5 campaign.

    The Southeast cluster comprises the Asab, Mender, Qusahwira, Sahil and Shah fields and accounts for approximately a third of Adnoc Onshore’s oil production capacity.

    MEED previously reported that Adnoc Onshore had awarded EPC works on the Southeast off-plot facilities project to state-owned China Petroleum Engineering & Construction Corporation (CPECC), with the value of the contract estimated to be around $1.2bn.

    The overall scope of work on the Southeast off-plot facilities project includes tying in more than 150 wells across the area’s fields, upgrading remote and central degassing stations, laying more than 270 kilometres of flowlines, digitising wells for remote monitoring, and implementing artificial intelligence-driven telemetry technologies.

    MEED also recently reported that CPECC awarded subcontracts on the Southeast off-plot facilities project, in its capacity as the main EPC contractor.

    The off-plot facilities project is a component of the overall $2bn-$3bn South East AIP5 development, with the on-plot facilities project forming the other part of the programme.

    CPECC is also performing EPC works on the Southeast on-plot facilities project in a consortium with Greece-headquartered Archirodon. Adnoc Onshore awarded an estimated $1.5bn contract for that project to the consortium in December 2024, with EPC works scheduled for completion in 2027.

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

    Saudi Arabia builds for the global stage; Rising uncertainty creates fresh set of challenges in the Maghreb; Gulf banks remain robust in the face of geopolitical tensions.

    Distributed to senior decision-makers in the region and around the world, the August 2026 edition of MEED Business Review includes:

    > MARKET FOCUS: Maghreb fortunes diverge
    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/18022436/main2622.jpg
    Indrajit Sen
  • Lebanon seeks interest for power generation projects

    3 August 2026

    Lebanon’s Electricity Regulatory Authority (ERA) has invited the private sector to submit expressions of interest (EoIs) for several upcoming power generation projects.

    The EoI covers up to five grid-connected solar photovoltaic projects with a combined installed capacity of 350MWp. The projects are also expected to include battery energy storage systems (bess) with a combined capacity of 1,000MWh. 

    The regulator is also seeking proposals for distributed dual-fired thermal power plants with net capacities ranging from 20MW to 100MW. The plants are expected to operate on natural gas as the primary fuel and heavy fuel oil as a backup fuel. 

    The submission deadline is 31 August. 

    Regulatory progress

    The EoI follows the establishment of Lebanon’s Electricity Regulatory Authority earlier this year, more than two decades after it was envisaged under Law No. 462/2002 but not implemented due to political delays. The electricity sector had previously been overseen by the Ministry of Energy & Water and state utility Electricite du Liban.

    Lebanon’s electricity sector continues to face insufficient generation capacity, fuel supply constraints, ageing generation assets and limited grid flexibility. These challenges have led to prolonged electricity shortages and increased reliance on private diesel generation and distributed solar systems, prompting the government to seek additional private investment in new generation capacity. 

    IPP model

    According to the EoI document, the projects are expected to be structured as independent power producer (IPP) schemes. Any future contractual arrangements, including power-purchase agreements, will be determined by the competent public authority under the applicable legal framework. 

    The ERA said the EoI is open to private investors, IPP operators, engineering, procurement and construction contractors, equipment suppliers and consortiums. It is intended to assess market interest, identify potential generation projects and evaluate the technical and financial capabilities of prospective developers. 

    Respondents are required to provide information on their technical and financial capabilities, proposed project locations, grid connection plans and relevant project experience. 

    For solar projects, developers are required to provide details including module and inverter technology, annual generation estimates and battery storage specifications where applicable. Thermal project submissions must include information on technology type, efficiency, fuel strategy, emissions performance and readiness for future natural gas operation. 

    The EoI states that developers will be responsible for land acquisition or leasing, permitting, financing, design, construction, grid interconnection, commissioning, and long-term operation and maintenance of the projects. 

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

    Saudi Arabia builds for the global stage; Rising uncertainty creates fresh set of challenges in the Maghreb; Gulf banks remain robust in the face of geopolitical tensions.

    Distributed to senior decision-makers in the region and around the world, the August 2026 edition of MEED Business Review includes:

    > MARKET FOCUS: Maghreb fortunes diverge
    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/18018733/main.jpg
    Mark Dowdall
  • Saudi economy swings to 4.8% contraction

    3 August 2026

    Register for MEED’s 14-day trial access 

    Saudi Arabia’s economy contracted 4.8% year-on-year in the second quarter of 2026, as a sharp fall in oil activities outweighed continued growth in the non-oil economy, according to flash estimates from the General Authority for Statistics (Gastat).

    The contraction was driven by a 24.7% year-on-year drop in oil activities, which cut 5.4 percentage points from the headline figure. Non-oil activities grew 0.6% and government activities rose 0.9%, contributing 0.4 and 0.1 percentage points respectively. Net taxes on products added a further 0.1 percentage points.

    On a seasonally adjusted basis, real GDP fell 4.9% from the first quarter, with oil activities down 21.5% quarter-on-quarter. Non-oil activities eased 0.5% over the same period, while government activities rose 0.2%.

    The second-quarter figures mark a reversal from the first quarter, when the economy grew 3% year-on-year. In the first quarter, both oil and non-oil activities expanded by 2.9% and government activities rose 1.5%, with growth recorded across all major sectors. Oil activities have since swung from that modest expansion to a steep contraction, while non-oil growth has slowed from 2.9% to 0.6%.

    The divergence between the oil and non-oil economy has widened as a result. While crude output fell steeply in the second quarter, the broader non-oil sector, the focus of the kingdom’s economic diversification programme, continued to expand, albeit at a slower pace than in the opening months of the year.

    Public finances

    The contraction came in a quarter when higher oil revenue improved the public finances. The budget deficit narrowed to SR34.29bn in the second quarter, down from SR125.71bn in the first, as oil revenue rose 22% year-on-year to SR185.13bn, according to the Finance Ministry’s quarterly budget performance report. Total revenue reached SR338.78bn, up 12% on the same period of 2025, while non-oil revenue increased 3% to SR153.66bn.

    Total spending rose 11% year-on-year to SR373.07bn. The sharpest increases were in grants, up 199% to SR1.24bn, subsidies, up 73% to SR13.27bn, and financing expenses, up 41% to SR16.81bn. Capital spending rose 16% to SR46.23bn.

    For the first half, the deficit totalled SR160bn, financed entirely through borrowing with no drawdown on government reserves. Revenue for the six months rose 6% year-on-year to SR599.76bn, while spending increased 15% to SR759.76bn. Actual first-half spending reached 58% of the full-year budget of SR1.312tn. Health and social development recorded the highest sectoral outlay at SR170.61bn, followed by the military at SR124.57bn and education at SR109.73bn.

    Public debt reached SR1.684tn by the end of the first half, up from an opening balance of SR1.519tn. Domestic debt stood at SR1.060tn and external debt at SR624.9bn. The government reserve closing balance was SR399.07bn.

    The kingdom has continued to tap the domestic debt market. The National Debt Management Centre closed its July 2026 issuance under the Saudi Arabian Government riyal-denominated sukuk programme at SR5.35bn, divided into five tranches. The largest, at SR3.83bn, matures in 2031, with further tranches of SR515m maturing in 2033, SR204m in 2036, SR300m in 2039 and SR500m in 2041.

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

    Saudi Arabia builds for the global stage; Rising uncertainty creates fresh set of challenges in the Maghreb; Gulf banks remain robust in the face of geopolitical tensions.

    Distributed to senior decision-makers in the region and around the world, the August 2026 edition of MEED Business Review includes:

    > MARKET FOCUS: Maghreb fortunes diverge
    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/18015899/main.gif
    Colin Foreman