Arab Spring: What revolution means for Arab banks
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Arab Spring: What revolution means for Arab banks

THE ARAB-NATIONALIST old guard that hung on to power for 40 years or more is falling. Even in the Gulf, regimes are under pressure. And as with the fall of the Berlin Wall, these events are having a far-reaching impact.

Already, India’s government has been shaken by anti-corruption protests, which the Arab Spring in some ways inspired. But as with Eastern Europe in the 1990s, political and economic transition is not without severe disruption. At the height of the protests in Egypt, bank branches faced mile-long queues of depositors. Looking back, bankers in Egypt did well to avert a wholesale collapse of the system. But the recent resignation of Egypt’s finance minister, Samir Radwan, after only six months in the job, doesn’t bode well for policy consistency.

Foreign direct investment and tourism has collapsed in countries such as Egypt, Jordan, Syria and Tunisia. Freddie Baz, CFO of Lebanon’s Bank Audi, reckons the value of deposits in those countries is about $16 billion lower than it would have been without the unrest, based on normal rates of growth.

These events are causing regional banks more pain as the shocks feed into bad-debt ratios. For the bravest and best informed, there is some opportunity to build market share. Private equity firms see opportunities to buy assets whose stock prices were previously prohibitive.

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