Gulf Banks Have More Cash: What's Next?

In a surprising turn of events, banks in the Gulf Cooperation Council (GCC) countries are sitting on more liquid cash than many of their global counterparts. This shift is largely due to the high interest rates in Europe and other regions, according to an executive from Qatar National Bank. Speaking at a summit in Paris, he explained that while international banks are wary about lending money for infrastructure projects because of geopolitical tensions in the Middle East, GCC banks are well-prepared to step in and support these initiatives. The demand for infrastructure projects is high, but finding enough equity to fund them is a challenge. Typically, 20-30% of a project's value needs to be covered by equity before banks will loan the rest. This often means billions or even hundreds of billions of dollars are needed. Who will provide this massive amount of money? The answer might lie with sovereign wealth funds in the Gulf region. In fact, Saudi Arabia alone estimates it will need between $1 trillion and $2. 5 trillion for infrastructure investments in 2024. Huge projects like Neom and the Red Sea Project are driving this investment surge. International banks are more cautious about where they invest, but GCC banks are ready to support both regional and European projects. This shift could mean we see more local banks financing infrastructure projects and fewer international ones.