Banks in the broader Middle East and North Africa region could see $220 billion of funding outflows if Israel-Gaza war spreads to the wider region, however, lenders are well positioned to cope with the stress, S&P Global Ratings has said.
The potential external funding outflows from financial institutions in the six-member economic bloc of GCC, Jordan and Egypt are about 30 per cent of the tested systems’ aggregate external liabilities, S&P said in its latest report on Monday.
Under the base case scenario, S&P assumes that the war will remain centred in Israel and Gaza, However, if there is a wider regional escalation including through proxy conflicts, investors' risk perception of the Middle East may prompt some confidence-sensitive funds to leave, as seen during previous stress.
“The latest war between Hamas and Israel heightens global geopolitical risks with potential adverse implications for investor confidence and external funding flows,” Mohamed Damak, S&P managing director for financial institutions ratings, and analysts Dhruv Roy and Benjamin Young wrote in the joint report.
“There may be scenarios where the conflict widens, leading more risk-averse investors to withdraw funds from the region.”
The Israel-Gaza war, which has become a major humanitarian crisis, has created further uncertainty for a global economy that is feeling the effects of stubborn inflation and high borrowing costs.
The war that broke out on October 7 could have serious consequences for the Mena economies if it escalates beyond the borders of the besieged Gaza enclave.
The continuing bombardment has already devastated the Gazan economy as Israel continues to attack the narrow strip. If the unabated military campaign continues, it risk the tensions to flare further in the broader region as death toll of innocent civilians continues to rise on daily basis.
Travel and tourism sectors, a vital source of foreign exchange and a key driver of economies in most oil-importing Mena countries, is likely to take the biggest hit.
S&P said although the regional banking system’s external debt level has increased in some countries over the past few years, in most markets, those liabilities were recycled into external assets.
The banking system is currently in a net external asset position, it said.
S&P’s hypothetical scenarios, in case of a broader conflict, assumes a 50 per cent outflow of interbank liabilities, an outflow of 30 per cent for external liabilities and a 10 per cent outflow rate for capital market liabilities – since these are mainly medium to long-term instruments.
Where the breakdown of liabilities was not granular, an outflow of 50 per cent, which was the case for Egypt and Jordan, S&P said.
“To fund these outflows, banks will have to liquidate their external assets,” S&P analysts said. “In a stressed environment, such liquidation could result in lower valuations for these assets, a potential haircut of 10 per cent on interbank deposits.
Lenders may have to take a 20 per cent loss on investment portfolios abroad and a “100 per cent haircut on loans to non-residents and other assets, which we assume will be much more difficult to liquidate in a stress scenario”, analysts said.
“We applied these haircuts because we assume that banks may incur some reduction in the value of their assets if they want to liquidate them prematurely.”
Despite the distress caused by the potential escalation of the conflict to other regional economies, most banking systems can manage the outflows, with only Qatar, Egypt, and Jordan facing deficits.
“For Egypt, the shortfall is mainly related to the recent build-up of external debt in the banking system. While for Qatar, the impact appears very manageable given the government's track record of support to banks.”
UAE currency: the story behind the money in your pockets
Watch live
The National will broadcast live from the IMF on Friday October 13 at 7pm UAE time (3pm GMT) as our Editor-in-Chief Mina Al-Oraibi moderates a panel on how technology can help growth in MENA.
You can find out more here
WHAT%20IS%20'JUICE%20JACKING'%3F
%3Cp%3E%E2%80%A2%20Juice%20jacking%2C%20in%20the%20simplest%20terms%2C%20is%20using%20a%20rogue%20USB%20cable%20to%20access%20a%20device%20and%20compromise%20its%20contents%3C%2Fp%3E%0A%3Cp%3E%E2%80%A2%20The%20exploit%20is%20taken%20advantage%20of%20by%20the%20fact%20that%20the%20data%20stream%20and%20power%20supply%20pass%20through%20the%20same%20cable.%20The%20most%20common%20example%20is%20connecting%20a%20smartphone%20to%20a%20PC%20to%20both%20transfer%20data%20and%20charge%20the%20former%20at%20the%20same%20time%3C%2Fp%3E%0A%3Cp%3E%E2%80%A2%20The%20term%20was%20first%20coined%20in%202011%20after%20researchers%20created%20a%20compromised%20charging%20kiosk%20to%20bring%20awareness%20to%20the%20exploit%3B%20when%20users%20plugged%20in%20their%20devices%2C%20they%20received%20a%20security%20warning%20and%20discovered%20that%20their%20phones%20had%20paired%20to%20the%20kiosk%2C%20according%20to%20US%20cybersecurity%20company%20Norton%3C%2Fp%3E%0A%3Cp%3E%E2%80%A2%20While%20juice%20jacking%20is%20a%20real%20threat%2C%20there%20have%20been%20no%20known%20widespread%20instances.%20Apple%20and%20Google%20have%20also%20added%20security%20layers%20to%20prevent%20this%20on%20the%20iOS%20and%20Android%20devices%2C%20respectively%3C%2Fp%3E%0A
SPIDER-MAN%3A%20ACROSS%20THE%20SPIDER-VERSE
%3Cp%3EDirectors%3A%20Joaquim%20Dos%20Santos%2C%20Kemp%20Powers%2C%20Justin%20K.%20Thompson%3Cbr%3EStars%3A%20Shameik%20Moore%2C%20Hailee%20Steinfeld%2C%20Oscar%20Isaac%3Cbr%3ERating%3A%204%2F5%3C%2Fp%3E%0A
Where to buy
Limited-edition art prints of The Sofa Series: Sultani can be acquired from Reem El Mutwalli at www.reemelmutwalli.com
The specs
Engine: 5.0-litre V8
Power: 480hp at 7,250rpm
Torque: 566Nm at 4,600rpm
Transmission: 10-speed auto
Fuel consumption: L/100km
Price: Dh306,495
On sale: now
The biog
Favourite hobby: taking his rescue dog, Sally, for long walks.
Favourite book: anything by Stephen King, although he said the films rarely match the quality of the books
Favourite film: The Shawshank Redemption stands out as his favourite movie, a classic King novella
Favourite music: “I have a wide and varied music taste, so it would be unfair to pick a single song from blues to rock as a favourite"
The chef's advice
Troy Payne, head chef at Abu Dhabi’s newest healthy eatery Sanderson’s in Al Seef Resort & Spa, says singles need to change their mindset about how they approach the supermarket.
“They feel like they can’t buy one cucumber,” he says. “But I can walk into a shop – I feed two people at home – and I’ll walk into a shop and I buy one cucumber, I’ll buy one onion.”
Mr Payne asks for the sticker to be placed directly on each item, rather than face the temptation of filling one of the two-kilogram capacity plastic bags on offer.
The chef also advises singletons not get too hung up on “organic”, particularly high-priced varieties that have been flown in from far-flung locales. Local produce is often grown sustainably, and far cheaper, he says.
Timeline
2012-2015
The company offers payments/bribes to win key contracts in the Middle East
May 2017
The UK SFO officially opens investigation into Petrofac’s use of agents, corruption, and potential bribery to secure contracts
September 2021
Petrofac pleads guilty to seven counts of failing to prevent bribery under the UK Bribery Act
October 2021
Court fines Petrofac £77 million for bribery. Former executive receives a two-year suspended sentence
December 2024
Petrofac enters into comprehensive restructuring to strengthen the financial position of the group
May 2025
The High Court of England and Wales approves the company’s restructuring plan
July 2025
The Court of Appeal issues a judgment challenging parts of the restructuring plan
August 2025
Petrofac issues a business update to execute the restructuring and confirms it will appeal the Court of Appeal decision
October 2025
Petrofac loses a major TenneT offshore wind contract worth €13 billion. Holding company files for administration in the UK. Petrofac delisted from the London Stock Exchange
November 2025
180 Petrofac employees laid off in the UAE
Tamkeen's offering
- Option 1: 70% in year 1, 50% in year 2, 30% in year 3
- Option 2: 50% across three years
- Option 3: 30% across five years
UAE currency: the story behind the money in your pockets
Killing of Qassem Suleimani
Red flags
- Promises of high, fixed or 'guaranteed' returns.
- Unregulated structured products or complex investments often used to bypass traditional safeguards.
- Lack of clear information, vague language, no access to audited financials.
- Overseas companies targeting investors in other jurisdictions - this can make legal recovery difficult.
- Hard-selling tactics - creating urgency, offering 'exclusive' deals.
Courtesy: Carol Glynn, founder of Conscious Finance Coaching
German plea
Ukrainian President Volodymyr Zelenskyy told the German parliament that. Russia had erected a new wall across Europe.
"It's not a Berlin Wall -- it is a Wall in central Europe between freedom and bondage and this Wall is growing bigger with every bomb" dropped on Ukraine, Zelenskyy told MPs.
Mr Zelenskyy was applauded by MPs in the Bundestag as he addressed Chancellor Olaf Scholz directly.
"Dear Mr Scholz, tear down this Wall," he said, evoking US President Ronald Reagan's 1987 appeal to Soviet leader Mikhail Gorbachev at Berlin's Brandenburg Gate.
360Vuz PROFILE
Date started: January 2017
Founder: Khaled Zaatarah
Based: Dubai and Los Angeles
Sector: Technology
Size: 21 employees
Funding: $7 million
Investors: Shorooq Partners, KBW Ventures, Vision Ventures, Hala Ventures, 500Startups, Plug and Play, Magnus Olsson, Samih Toukan, Jonathan Labin
