Deposits placed with Western banks by Middle East countries rose by $3,902 million in the second quarter of 1994, according to data published by the Basle-based Bank for International Settlements (BIS). This was the first increase since September 1992 and follows a period of financial pressure when lower oil prices led to a reduction in deposits

However, lending by international banks to the Middle East and North Africa is characterised by stagnation, the BIS says in its November report on banking trends. When a strong build-up of cross-border interbank balances by the UAE – totalling $2,000 million – and unallocated claims of US-based banks are excluded, reported claims on the Middle East declined by $2,500 million in the second quarter of 1994.

Claims on Iran fell by $1,200 million. The BIS says this may be due to bilateral debt rescheduling deals clearing arrears.

‘Elsewhere in the region, the most significant development was the continuing withdrawal of Saudi Arabian deposits with reporting banks in a context of maturing external debt and high budgetary requirements,’ the BIS says. Saudi Arabian deposits fell by $11,800 million in the 12 months to end- June 1994.

There was a $2,400 million reduction in claims on Turkey in the April- June 1994 period, mostly on short-term interbank lines. But deposits from Turkey increased by $1,000 million during the second quarter when there was an easing in liquidity strains, the BIS says.