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Established in 2006 as a Community of Reality

Welcome to the Neno's Place!

Neno's Place Established in 2006 as a Community of Reality


Neno

I can be reached by phone or text 8am-7pm cst 972-768-9772 or, once joining the board I can be reached by a (PM) Private Message.

Established in 2006 as a Community of Reality

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The repercussions of the collapse of oil prices put pressure on Gulf banks

rocky
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The repercussions of the collapse of oil prices put pressure on Gulf banks Empty The repercussions of the collapse of oil prices put pressure on Gulf banks

Post by rocky Tue 08 Mar 2016, 2:10 am

The repercussions of the collapse of oil prices put pressure on Gulf banks

The repercussions of the collapse of oil prices put pressure on Gulf banks 74825_n3

March 7, 2016

Low oil prices, the effects of the Gulf countries has widened, to move from forcing governments to borrow, to put pressure on Banks in the region, for the management of liquidity required by regulators.

Global investors became shy away from the Gulf region bonds in recent months, because of concerns about slowing economic growth and a large deficit in the budgets of some of them.

This led to repercussions on banks from Doha to Muscat, which is finding it difficult to raise new capital since the beginning of the year, due to the vagaries of the stock markets. It seems unlikely that the situation is improving in the near future where the banks will have to compete with governments to borrow.

And announced about a dozen regional banks, plans to increase capital in an attempt to meet local regulatory requirements, which sometimes go beyond the Basel 3 banking standards and increasing the reserves after lending growth over the years.

It seems that the banks have to choose between borrowing at a higher cost and the risk after the fulfillment of regulatory requirements stricter, which took effect will start during the next three years.

Another complication is that the exodus of foreign buyers will force banks to resort to local investors to buy its debt or shares. The problem here is that the banks themselves are the biggest debt investors in the region.

Bankers confirms that Gulf banks, which boosted its reserves of capital in the wake of the global financial crisis, are still far from any imminent danger. But he no longer has the previous liquidity with the government to withdraw some of their deposits to bridge the budget deficit, which revealed the relationship between governments and banks thread when falling bond markets, as happened in Europe during the euro zone crisis.

He said Sheikh Jassim bin Hamad Al Thani, Chairman of Qatar Islamic Bank, told Reuters that "the vagaries of the market certainly influenced the plans for the issuance of instruments to promote capital but we are in a good position."

Although the minimum basic liquidity in accordance with the Basel 3 of 7 percent and rise to 9.5 percent of the world's major banks, most states set higher levels, where required, for example, 13 percent of Kuwait. Ram Mohan Nataraja, portfolio manager at the Abu Dhabi Investment Authority and said that the owners of wealth and private banks were forced to sell and Setnehm for repurchase.

Burgan Bank has sold the third largest bank in terms of assets Kuwaiti permanent bond in September 2014 a yield of 7.25 percent. Yield 9.476 percent reached on January 11, before jumping to 11.525 percent in the third February.

Even the National Bank of Kuwait, which boasts one of the highest credit ratings of the Bank of the Gulf yield bonds jumped 5.75 percent of revenue when issued in April to 7.27 percent in the January 22.

According to those moves to convince investors to buy new bonds to strengthen capital will require banks to pay more and provide more attractive returns which will upset the Gulf bond issuers are particularly sensitive to price. But the limited choices make prices overcome pride.

The Dubai index fell 39 percent between mid-July and mid-January, while the Saudi index has lost about 10 percent since the beginning of the year, which means that equity investors will not agree to pump money into the rights issues.

Middle East did not witness never sell the so-called reserve capital bonds convertible bond is also rare to shares.

While the retention of profits will give the bank reserves it will receive a slight boost from the dividends of shareholders that have already targeted by local regulators.

The UAE Central Bank asked banks to obtain consent before disclosing dividends for 2015, while regulators in Oman warned it could intervene on distributions to support capital rates.

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