Saudi banks unruffled by Greece-euro crisis
Saudi Arabia‘s banking system remains largely insulated from the ongoing events in the euro zone, with high levels of liquidity and solid capitalization ratios, say top economists in the Kingdom.
Their reaction came as early results from the referendum in Greece showed that the country has rejected euro zone bailout terms.
“There are very few first and second round effects on Saudi and Gulf economies especially in the banking sector.” John Sfakianakis, Middle East director at Ashmore Group, told Arab News.
He added: “In terms of trade, there is negligible effect on the Gulf. There will be some one off negative effect on regional stock markets but of little medium term consequence. The region is very well insulated all around.”
According to AFP, the euro was dropping against the dollar on Sunday. One euro was worth $1.0987 at 1915 GMT, down 1.20 percent from Friday night, in electronic trading before Asian markets opened.
Speaking to Arab News, Ihsan Bu-Hulaiga, head of the Joatha Consulting, commented: “The impact of Greece crisis will be minimal on Saudi Arabia because the trade between the two countries is limited to about $4 billion which is in favor of Saudi Arabia.”
Also, there will not be any negative impact because there is no much exposure of Saudi banks to recent developments in the euro zone, he said.
He pointed out that Saudi Arabia and Greece had signed two agreements on double taxation and investment protection. Those deals would protect Saudi interests in case anything goes wrong, he said.
Ihsan Bu-Hulaiga pointed out that there might not be any major negative fallout because Greek economy is small compared to other economies in the union. The result also delivers a hammer blow to the European Union’s grand single currency project.
Meanwhile, Talat Hafez, secretary-general of the Media and Banking Awareness Committee of Saudi banks, denied any negative effect caused by Greek credit crisis on Saudi banks. He said: “Saudi banks have normal dealings with others foreign banks and there is no impact on the Saudi banking sector reflected by the financial crisis in Greece.
Source: ArabNews – Saudi banks unruffled by Greece-euro crisis
