Gulf banks replace European banks as major acquirers in MENA

Banks in the oil-rich countries of the Gulf Cooperation Council (GCC) are becoming active buyers of stakes in the Middle East and North Africa (MENA) banks replacing European banks, Standard & Poor’s said in a report.

In a report ‘Exit European Banks, Enter Gulf Banks As Major Acquirers in The Region’s Emerging Markets’, S&P has noted a sharp rebound in acquisitions by Gulf banks in 2012, especially in Turkey and Egypt.

“Banks in the Gulf have capital to spare, and are literally capitalising on their traditional strengths such as strong capital positions, healthy liquidity, and supportive shareholders to pursue acquisitions in MENA emerging-market countries, where opportunities for long-term growth exist,” S&P’s credit analyst Timucin Engin said.

According to Standard & Poor’s, these transactions are opportunities for diversification into markets with large unbanked populations.

“A negative factor is that, excluding a few, banks in the Gulf — Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates — usually lack lending and credit underwriting experience outside their region, which we view as a significant risk factor,” it added.

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