The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site. Please see our Subscription Terms and Conditions.

All material subject to strictly enforced copyright laws. © 2022 Euromoney, a part of the Euromoney Institutional Investor PLC.

Middle East: Saudi banks dig deep for debt as liquidity runs dry

A liquidity crunch is affecting banks worldwide and Saudi Arabia is no exception. Deposits are falling as the government pulls out cash to fund the deficit, yet lending continues to grow. Will the banks change their lending models or turn to the capital markets for funding?


Illustration: Kevin February

There is a growing worry in Saudi Arabia that low oil prices are here to stay. But it is not just the government that is having to adapt to a new reality of deficits, trimmed spending and capital market issuance. Banks, too, are feeling their way through a very different environment.

The banks themselves tend to be reluctant to discuss their liquidity, but their annual results have been revealing. According to Moody’s, bank results released so far this year indicate a slowdown in deposit growth from 12% in 2014 to 1% in 2015, and it is likely to get worse.

That said, the figures may represent a slowdown but not yet a contraction, which is perhaps a surprise. After all, by the time of those results, oil prices had declined more than 75% (since June 2014), with a consequent 14% reduction in the 2016 government budget and a 15% fiscal deficit for 2015. 

Saudi Arabia, like other Gulf states, has dealt with the pressure on its public finances by pulling out government deposits from its banks. Those government deposits were integral to Saudi banks’ liquidity mix.

You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.


Unlimited access to and

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually


Unlimited access to and, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors


Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree