Bahrain says facing no liquidity crunch
Manama, March 9, 2011
Bahrain's banking industry is facing no liquidity problems and is indeed possibly stronger now than at any time in the last decade.
That was the message from Bahrain Association of Banks (BAB) chairman and BBK chief executive Abdulkarim Bucheery, following a meeting with around 15 international banks based in Bahrain on Tuesday.
'I can confirm that as of now there are no liquidity problems in Bahrain's banking system,' he said. 'My own bank, BBK, is at its peak in terms of liquidity and what happens to us happens to all banks.
'I have been with BBK for 10 years and it has never been so strong and we are receiving support from outside with long-term deposits coming in worth millions of US dollars which is a significant indication that the international community is happy.'
'There has been no flight of capital,' he said.
'There are a few individuals who may have decided to transfer cash to their home countries but this is in no way significant in terms of the industry.
'If the unrest continues for a long time we could see negative implications and international banks could cut lines of credit and funding of trade but that most certainly has not happened yet.
'Hopefully the unrest will be a temporary situation and our ratings will improve.'
He said that one problem for banks was that customers were not approaching them for loans for investment because business was hesitant about investing at the moment.
'Retailers have been affected because they are not selling so much so they may need to borrow to cover a drop in cash flow,' he said.
'The Bahrain banking industry could well come out of this situation stronger than before because it has weathered the problems.
'We have been meeting with the banks and they are operating normal banking hours.
'No bank has complained about a flight of capital or people taking out deposits but if the situation continues it will impact the economy in the country and that will effect the banking community.
'The banks are in a strong position to lend and fund business This is not a problem for banks but individual businesses are suffering and not borrowing to expand. If the economy needs support then the banks can give it.'
'I am just back from a road trip in the UK where I was talking to investors in our recent bond issue,' he said. 'I was able to assure them that what has happened in Tunisia and Egypt is not happening here and that Bahrain remains largely peaceful and calm.
'More banks should be going to the international markets to let people know what they read in the international media is just not true about the situation here.'
He said that in 2010 lending was tight because of the continuing effects of the global financial crisis and that in February consumer loans were not as high as he would like but that was likely to continue with 100,000 Bahraini families being given BD1,000 each so they will not need leans for some time. Commercial loans also slowed down.
But he warned about the continuation of political unrest if it goes on too long.
'If it goes on a long tome then you could see lines of credit from international banks suspended,' he said.-TradeArabia News Service
That is what you would expect. Banks here had to look at lines of credit to Tunisia and Egypt when there was trouble there but the situation in Bahrain is not like that. It is largely peaceful and calm here.-TradeArabia News Service