GCC moves to set up common credit network

Gulf oil producers are discussing plans to set up a common network for the exchange of credit information to face a fresh global fiscal crisis and more regional debt defaults, a Saudi newspaper reported yesterday.

Central Bank governors in the six-nation Gulf Co-operation Council (GCC) discussed the project at previous meetings and are expected to hold more talks on the plan in the near future, said the Arabic language daily Aleqtisadia.

Quoting unnamed sources in Riyadh, the paper said the presence of some national credit agencies in the GCC would facilitate the project but added it would take time as more discussions are required.

"GCC countries are in the process of setting up a joint network involving linking their financial institutions electronically in the field of credit information with the aim of exchanging relevant data to protect them against credit risks," it said.

"GCC central bank governors have already discussed the project and some member countries have shown strong interest in it… The governors are now determined to push ahead with this project at talks in the next period."

The report said the plan followed the 2008 global fiscal distress, the ensuing credit tightness worldwide, and regional debt default problems. "Many GCC banks have been affected by those developments… this has given rise to the idea of linking credit information networks in the region," it said.

"Had the GCC banks possessed enough information about the credit and financial position of defaulting companies, they could have encountered the problem in a more active way," the paper quoted one source as saying.

Spearheading regional efforts to upgrade transparency and credit data, Dubai last month selected the Emirates Credit Information Company (Emcredit) as the appointed body for providing credit information services in the emirate.

Kuwait, Bahrain and Qatar have credit information agencies but their functions are confined to providing data on personal loans. Saudi Arabia, the largest Arab economy, also has a credit agency serving local individuals and companies.