The current turmoil in the banking industry, which has seen the collapse of four US lenders and the takeover of Credit Suisse Group AG, isn’t over and growth is a concern, according to the chief executive officer of Kuwait’s fourth-largest lender.
(Bloomberg) — The current turmoil in the banking industry, which has seen the collapse of four US lenders and the takeover of Credit Suisse Group AG, isn’t over and growth is a concern, according to the chief executive officer of Kuwait’s fourth-largest lender.
“Many things are happening at the same time, so the world is worried,” Elham Mahfouz, CEO of Commercial Bank of Kuwait, told Bloomberg TV in an interview at the Qatar Economic Forum. The tumult “isn’t finished,” she said.
“You don’t want to have exposure to an entity that you didn’t expect to have a problem, and suddenly they have a problem,” Mahfouz said. “And you don’t want to wake up… to having a similar situation to Credit Suisse.”
Some of the Middle East’s biggest investors were the hardest hit by the crisis at Credit Suisse that eventually led to it being taken over by UBS Group AG. In recent months, four regional lenders in the US have collapsed amid steep Federal Reserve interest-rate hikes and deposit outflows.
Commercial Bank of Kuwait is taking a “very conservative” approach to loans and credit, said Mahfouz, who expects oil prices to keep dropping over the next six months.
While Kuwait’s banking sector is very strong, this year there has been “the glimpse of a drop, and the government has to do many things to pick up on that,” Mahfouz said. Lenders could see a backlog of projects if oil prices fall and the government tightens spending, which could lead to risks on the business side.
–With assistance from Kateryna Kadabashy.
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