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28 February 2024

Bahrain more over-banked than G7 nations

By Staff Writer

UAE banks have an asset base of Dh1trn (MUSTAFA KASMI)


Even as GCC is considered to be one of the highest over-banked regions, Bahrain is more over-banked than most of the developed countries in the West including France, Germany, Canada and the United States, in terms of assets to GDP ratio, according to statistics compiled by Gulf Capital Group (GCG), a DIFC-based company.

These are based on bank statistics as of June end, this year. The total asset base of the UAE banking system has already crossed the Dh1 trillion-mark to overtake that of Saudi’s as of September 30 this year.

Most of the GCC countries have higher assets (bank) to GDP ratio than the United States, which has an asset-GDP ratio of only 0.93 per cent. The UAE with an asset-GDP ratio of 1.62 per cent is the second ‘highest banked’ country in the GDP whereas, Bahrain with a ratio of 13.70 per cent is more than three times over-banked than even France and Germany which enjoy a ratio of 4.27 per cent and 3.61 per cent respectively.

The banking density measure of GCC banks reveals that the regional banks have been able to expand their book size with exposure to a smaller population and have been able to attract substantial foreign investment, said the report.

“While the consolidation trend has already made its way through the UAE markets, Bahrain has yet to reap the benefits of the same. With an asset to GDP ratio higher than all other GCC countries and many of the G7 countries, Bahrain is the most over-banked [also in terms of number of banks] country in the GCC. Experts warn that consolidation among the smaller Bahraini banks would thus be inevitable as competition around the GCC heats up.