German banks remain by far the biggest lenders to the countries of the Middle East, ahead of France, the US and the UK, according to a survey for the year to June 1996 published by the Basle-based Bank for International Settlements (BIS). Total bank claims on the region fell during the 12-month period, which may be a reflection of the relative strength of oil prices.
Consolidated BIS figures show bank claims on Middle East countries, including North Africa, Turkey and Israel, fell to just under $88,000 million at the end of June from $91,000 million the year before. A major reason for the fall appears to have been high oil prices: Kuwait, for example, made the final repayments at the end of 1996 on a $5,000 million sovereign loan taken out after the Gulf War ended in 1991. Bank claims on Iran fell over the year: the BIS notes that banks are still wary about Iran even though its debt service position has improved.
About 60 per cent of bank claims on the region are of a maturity of one year or less, with local banks accounting for about half the total and the rest split between the public and private sector in Middle East countries. One significant change is that the proportion of public to private borrowing from Western banks fell steadily during the 12-month period.
German banks accounted for nearly a quarter of the June 1996 total with claims mostly on Turkey, Iran, Iraq and Kuwait. French banks were next with claims totalling $14,000 million, mostly on Turkey and North Africa. British banks’ claims stood at around $6,000 million in June 1996 – this is about half the figure for the previous year and appears to reflect lower borrowing by Gulf oil-producing countries. Japanese bank claims on the region also fell. By contrast, US banks are now owed more in the region, mainly from Turkey and Saudi Arabia. The figures reflect only claims on the region by banks in the industrialised world and not the other way round: some countries, including Gulf Arab states and Egypt, are net lenders to the rest of the world