Gulf states to compete more for money as banks balk after Dubai

The emirs, presidents and sheikhs of the six members of the Gulf Cooperation Council meet in Kuwait this week with the days of easy credit over following a year of debt defaults and deferred payments.

Dubai World said it was seeking to restructure $26 billion of borrowing, and the race to build financial centres and skyscrapers is now turning into a competition to convince banks simply to keep lending to the region, investors and economists said. The GCC annual summit started on Sunday.

“Financing will be harder to attract for all companies in and related to the Gulf in the next few quarters as international banks will be loath to have any association with regional corporates and governments, regardless of their stability,” said Emad Mostaque, who helps manage $100 billion at Pictet Asset Management in London.

While the financial crisis forced bank bailouts across the western world, in the Gulf it has jeopardised plans to develop markets and forge closer economic ties. At the GCC’s meeting last year, leaders approved a monetary union agreement, a step toward forming a Gulf single currency.