23/07/2014
Able to reduce their «distressed» allocations with unrealized ample liquidity
Gulf banks extracted the forefront of the loan market in the region
Gulf banks which enjoy abundant liquidity on the growing market Acquires share of loans in the region while reducing fees and ease conditions to pull the rug from under the feet of some foreign banks dominated lending days. This change reflects the weakening of European and American banks after the global financial crisis under its cost-cutting measures and regulatory pressures on domestic markets to prevent their strength to win business in the Gulf. But also due to a change in the work environment of Gulf banks with support from high oil prices and the rapid economic growth in the region managed to repair their balance sheets of the banks after the crisis and many are reducing the allocations for non-performing loans which resulted in abundant liquidity. Gulf banks now accelerated to manage liquidity and exploitation through lending, even on highly concessional could not have contemplated a year ago. He said Benaco Maitra, head of financial managers to the Kuwait projects company holding (qipco holding) ' a really good time for borrowers who have good credit in the market of small and medium-sized local banks ' to directly approach them.
He said: ' local banks eager to lend today than at any time in the past five years. They provide better conditions and more willing than in the past (lending) to longer-maturity '. The classification tables can see this change in the Thomson Reuters schedules for loan classification GCC common. In 2011, the list of the largest 25 banks pay for syndicated loans of 20 foreign banks. But in the first half of this year, the list includes not only eight banks from outside the region. And HTML as well as NBC, which made the list in the first half of 2013 to third and was replaced by Saudi Bank Samba in the lead. Standard Chartered came down to twenty-first place from fourth. First Gulf Bank said in Abu Dhabi who jumped to second place from third place and that his rise was a result of the adoption of a more appealing approach towards the market. Said Steve Perry, Chief of debt management and syndicated loans in the Bank ' was the first Gulf Bank strategy change since July of last year increasing products and then more appropriate solutions to meet its clients ' core.
The growing desire of Gulf banks shows in lending in the fact that even with the increase in the total volume of lending in the region during the last year, the volume of loans already common because banks concluded more bilateral deals instead of participating in large loans with other banks. In Saudi Arabia, for example, the SAMA data showed that the volume of Bank lending to the private sector jumped 12 percent from a year before level to up to the equivalent of 319 billion dollars in May. In the U.A.E. increased total lending 8.3 percent to 357 billion dollars. But Thomson Reuter's data, the BBC suggests that syndicated loans Middle East fell 45 percent from a year earlier to 17.5 billion dollars in the first six months of 2014. Perhaps this trend also appears on the most attractive terms offered by banks to borrowers. Thomson Reuter's data show the BBC that the average maturities of loans involved in the Gulf since the beginning of the year amounted to 6.27 years up from 5.77 years year ago. An informed source said that Dubai holding company for stock exchanges The Emirate was able to obtain a loan of 500 million dollars for the three years of the Dubai Islamic Bank last month interest 90 base points above the interest rate of London interbank (LIBOR). This price was too low, particularly for the company seemed on the brink of default before five years. Some Gulf banks willing to reduce their charges substantially to attract borrowers. Thomson Reuter's data showed that total loan fees common in the Middle East fell to 101.2 million dollars in the first half of 2014 compared with $ 216.3 million a year ago. This was a decrease of 53 per cent greater than the decline in the volume of lending. As a result, European banks, some dating back to the Gulf region as lending institutions after her separation from emerging markets two years ago found this less profitable. Simon said Meldrum, Director of syndicated loans in the Royal Bank of Scotland ' there is no doubt that the increasing regulatory requirements and capital costs have increased lending to most foreign banks and to make some opportunities economically unattractive.
Bonds
Effects caused by the eagerness of banks' lending to drop corporate bond issuance in the region. The companies have little incentive to run the complicated procedures for issuing bonds while they can easily get a loan from local banks. Traditionally, the United States gathered around 80 per cent of its debt through the bond and 20% through loans. In Europe, with about 30 per cent of the bonds and 70 per cent of the loans. In the Gulf they thought that stake on loans tended owing to delays in the bond market in the region and Gulf banks turnout appears to be lending increased the likelihood the cuff over the last year. He said maitra of Kuwait projects company ' banks can set up deals to suit the business needs of the borrower is much larger than the bond market. The real competitive tool banks can use. Equally important, the borrowers enjoy more flexibility in repayment on the loan market compared with bond market '. According to Thomson Reuters and Freeman for advisory services to bond in the Middle East 16 percent before a year to the equivalent of $ 22 billion in the first half of 2014. Last month the DP world has signed one of the largest port operators in the world signed an agreement for a loan of three billion dollars for five years to refinance its debt with lower interest. If the course is not the case for perhaps resorted to issuing bonds, but the question remains: how long will this trend? Perhaps the loan-to-deposit ratios in the Gulf banks one of the obstacles that may impede the lending banks. But this still looks far from levels that may restrict their lending. For example, the proportion of the total bank loans to the private sector and Government to total deposits 0.86 in may below the level in 2009, which stood at 0.89. And UAE Bank loans amounted to 0.98 deposits in April, down from 1.07 at the end of 2011.
Another factor is the regulatory rules. Over the past two years have Saudi regulators pushing banks to set aside large provisions for non-performing loans to reduce risks in the banking system. Last year the UAE imposed a cap on bank lending to the quasi-governmental entities and local governments. The Basel-3 new banking to be applied throughout the world over the next few years that oblige banks to allocate more liquidity as the capital. And at the end of these factors is likely to limit the amount of money that banks can lend to the Gulf and then encourages companies to issue more bonds.
But the process has been slow-moving. Many GCC banks significantly exceed Basel III standards for capital and still the UAE banks five years to apply the new rules on banks ' exposure to government institutions. Meldrum said from the Royal Bank of Scotland that it is important not to focus too much on the joint loan classification scales may change rapidly. But he added that it was clear that local institutions tend to play a bigger role in the loan market Gulf. He continued: ' regional banks currently enjoy good capital and the liquidity meant that they could make more loans. They want to seek to acquire a greater share of customer and portfolio transactions by arranging deals rather than simply participate '.
