( Gulf ) - Banks in the Middle East will announce losses from exposure to the US subprime mortgage crisis when they report fourth-quarter earnings, the Middle East Economic Digest (MEED) reported, citing bankers.
Gulf Arab officials, including central bankers, have repeatedly said the region's banks were largely shielded from the crisis triggered by defaults on subprime mortgages, or home loans for people with a poor credit history.
Of the 20 largest Gulf banks by market value, only Abu Dhabi Commercial Bank has reported any subprime losses, writing down $19 million in the third quarter. "I am sure there will be write-downs from Middle East banks," MEED quoted an unnamed senior Bahraini banker as saying in its latest edition.
"Even we do not really know what our exposure is. I know there are some regional banks who thought all their investments were safe but are now discovering the underlying asset is subprime," the banker said, according to the London-based weekly.
Banks in the UAE and Bahrain, the Middle East's biggest financial centres, will be worst affected, it said. "We saw some of these funds underwritten by major wholesale banks in the region, particularly in the UAE and Bahrain," a Qatar-based banker said.
Many of the region's largest lenders have missed analysts' fourth-quarter profit forecasts, although none have attributed that to the subprime crisis.