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
  • Nakheel awards Dubai Islands marine works contract

    9 October 2026

    Dubai-based developer Nakheel, part of Dubai Holding Real Estate, has awarded local firm Mar Marine & Building Contracting a contract for marine and beach works on Island B at Dubai Islands.

    The scope includes constructing breakwaters, removing existing rock revetments and forming a new 320-metre beach near the Bay Villas development.

    The contractor will also refurbish existing beach areas and undertake remedial works along approximately 3 kilometres of the island’s western shoreline.

    The works are scheduled for completion in the fourth quarter of 2027.

    The package supports the Bay Villas project, which comprises 636 villas and townhouses on Island B. Nakheel awarded Fibrex Contracting an AED2.6bn ($708m) construction contract for the residential development in August 2025.

    The marine works award follows Nakheel’s AED527m primary infrastructure and utilities contract for Island B, which was awarded to Al-Nasr Contracting Company in April 2026.

    In September, Nakheel awarded a main construction contract worth more than AED800m ($218m) for phases one and three of Bay Grove Residences at Dubai Islands. The contract was awarded to local firm Metac General Contracting Company.

    The contract covers the construction of 537 apartments, comprising one- to four-bedroom units, across seven residential buildings. Phase one includes 296 units in four buildings, while phase three comprises 241 units across three buildings.

    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/20418469/main.jpg
    Yasir Iqbal
  • Iraq refinery project given regional approval

    9 October 2026

    Plans to establish a 70,000-barrel-a-day (b/d) refinery in the Iraqi town of Qayyarah have been approved by the Nineveh Provincial Council, which has called for the project to be referred to Iraq’s Council of Ministers. The council also recommended that Duhok-based Karband Company, an industrial manufacturer of asphalt products and lubricating oils, be involved in the project.

    The council’s vote follows a meeting held in September between Iraq’s Oil Ministry and Angola’s Sonangol on potentially jointly developing the Qayyarah refinery.

    The planned refinery would allow more of the crude produced in Qayyarah to be processed locally, increasing supplies of petroleum products and reducing the need to transport locally produced crude south for export via the Strait of Hormuz.

    Iraq awarded the Qayyarah oil field to Sonangol in its second licensing round in 2009, with an initial target of around 120,000 b/d.

    A new upstream expansion phase began in January 2025, when Sonangol contracted the Iraqi Drilling Company to drill 10 wells, with an option for three additional appraisal wells.

    An existing refinery in Qayyarah, built in 1955, has a capacity of 20,000 b/d.

    Progress on the new facility has stalled in recent years, with little movement since 2021, when Iraq signed a memorandum of understanding with Sweden’s SEAB and Turkiye’s Limak on developing the refinery.

    Previously, Iraq’s Oil Ministry said the project would include modern units and complex refining technology to produce products meeting Euro 5 standards

    The scope of the project is expected to include:

    • Processing units
    • Storage tanks
    • Distillation units
    • Associated facilities

    The project was first announced in 2018 and has encountered several delays due to funding problems.

    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/20413126/main.png
    Wil Crisp
  • Contractors prepare bids for more Qiddiya infrastructure

    8 October 2026

     

    Saudi gigaproject developer Qiddiya Investment Company (QIC) has tendered a design-and-build contract covering infrastructure works at District 0 in Qiddiya City.

    The scope includes the design, supply, construction, testing, commissioning and defects liability period for Road I in District 17, Road Q in District 19 and the District 18 Ring Road.

    In total, the package covers approximately 17.4 kilometres of roads, including 1.4km of bridge structures.

    Contractors have until 14 October to submit proposals.

    Beirut-headquartered Dar Al-Handasah is the lead design consultant for districts 17 and 19, with a remit that also includes potable water and recycled water storage tanks and pumping stations.

    US-based Jacobs is the lead design consultant for the District 18 Ring Road.

    The tender is the third infrastructure package for Qiddiya’s District 0. The first two packages, tendered in March, remain under procurement, as MEED exclusively reported.

    MEED understands that bid evaluation for these packages is in its final stages and that awards are expected shortly.

    QIC is also advancing plans to develop additional assets at Qiddiya City.

    Last month, MEED exclusively reported that QIC had awarded an estimated $500m-$600m contract to build an e-games arena, known as the Fortress Arena.

    The scope of work includes the construction of an auditorium with a capacity of about 5,100 seats, as well as commercial areas, hospitality facilities and other associated infrastructure.

    The Fortress Arena is one of several major projects within the wider Qiddiya development.

    Other projects include the Dragon Ball theme park, Prince Mohammed Bin Salman Stadium, a horse-racing venue, a performing arts centre, the Speed Park, the National Tennis Centre, Six Flags Qiddiya City and Aquarabia water park.

    The project is a key part of Riyadh’s strategy to boost leisure tourism in the kingdom. According to UK analytics firm GlobalData, leisure tourism in Saudi Arabia has grown significantly in recent years.

    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/20384978/main.jpg
    Yasir Iqbal
  • Chinese contractors begin Jordan rail construction

    8 October 2026

     

    Register for MEED’s 14-day trial access 

    Beijing-headquartered firms China Civil Engineering Construction Corporation (CCECC) and China First Highway Engineering Company (CFHEC) have started construction work on the Aqaba-Al-Shidiyeh-Maan Railway project in Jordan.

    The 403-kilometre rail network is divided into six packages. CCECC is executing packages one to four, while CFHEC is undertaking packages five and six.

    The scope of work covers constructing railway tracks, about 55 bridges, six tunnels and related structures.

    The project aims to link Aqaba with key mining and production sites and the Maan logistics zone, establishing an integrated system for transporting bulk cargo and containers between ports, production centres and inland logistics facilities.

    The network is expected to carry around 16 million tonnes of phosphate and potash each year from production sites to Aqaba’s ports.

    In April 2025, a French-Swiss joint venture of Egis and Arx was awarded the project’s design consultancy contract.

    The estimated $2.5bn project is being developed by the Jordan-UAE Railway Company, which is jointly owned by Abu Dhabi’s L’imad Holding and Jordanian entities including the Jordan Phosphate Mines Company, the Government Investments Management Company, the Social Security Investment Fund and the Arab Potash Company.

    Jordanian and UAE officials attended a groundbreaking ceremony held earlier this week to mark the formal start of construction work.

    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/20371915/main.jpg
    Yasir Iqbal
  • Iraq discusses starting operations at $3.78bn refinery project

    8 October 2026

    Iraq’s Minister of Oil, Basem Muhammad Khudair Al-Abadi, has met with Japanese officials to discuss plans to commission the fluid catalytic cracking (FCC) unit at the Basra refinery upgrade project, according to a ministry statement.

    The meeting was attended by the Japanese Embassy’s executive officer as well as representatives from the Japan International Cooperation Agency (Jica) and Japan-based JGC, which is the main contractor on the project.

    According to the ministry, discussions focused on direct implementation steps and coordination between Iraqi authorities and the Japanese partners to bring the unit online using Japanese refining technologies.

    Iraq’s South Refineries Company (SRC) sent JGC notice of the main contract award for the Basra refinery upgrade project’s FCC package in August 2020.

    JGC was awarded the contract in consortium with South Korea’s Hyundai E&C.

    The official contract signing ceremony was held in Baghdad on 1 October 2020.

    The contract awarded to JGC, which uses the engineering, procurement, construction and commissioning model, was worth $3.78bn.

    Project delays

    The project has faced issues related to the ongoing regional conflict, which started when the US and Israel attacked Iran on 28 February.

    JGC evacuated its personnel from the site in the southern oil hub of Basra following the start of the regional war, stopping work on the project, which was in its final stages of construction.

    In August, JGC signed an agreement to restart work.

    The project will produce around 5 million litres a day of gasoline and 7 million litres a day of diesel.

    The FCC package is part of a broader project to upgrade the Basra refinery.

    Oil Ministry officials said in late 2025 that the Basra refinery upgrade project aims to slash Iraq’s fuel import bill and convert heavy refining residues into high-value petroleum products.

    The project site is located about 12 kilometres east of Iraq’s southern city of Basra.

    The wider upgrade project is installing new facilities on land adjacent to the existing Basra refinery, including a vacuum distillation unit and a diesel desulphurisation unit.

    In April 2021, France’s Axens won a contract to provide four process technologies to SRC for the Basra refinery upgrade project.

    The technologies that SRC selected are:

    • Diesel hydrotreatment unit (Prime-D)
    • Vacuum gasoil (VGO) hydrotreating unit
    • VGO fluid catalytic cracker unit
    • Oligomerisation unit (polynaphtha)

    In addition, Axens is providing catalysts and adsorbents and proprietary equipment, training and technical services.

    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/20366574/main.png
    Wil Crisp