The Commercial Banks

In 1986 the commercial banks are still the main component of the financial markets in the Arabian Gulf. The type of business done by the banks in Saudi Arabia, Kuwait and Bahrain is quite similar. The 196 banks in the area service the small depositors and borrowers, but their main lending activities, especially for the OBUs in Bahrain, are limited to a small pool of customers numbering not more than 200 corporations or large private companies. Of course, not all 196 banks are active but it appears, at least to the writer, that about 100 banks have some substantial activity. In Kuwait the commercial banks which have deposits from the public at large lent 59 per cent of their risk assets to only 202 customers. ¹ In Bahrain, the 175 banks present did not deal with more than 100 customers outside Bahrain. In Saudi the major activities of the banks were also limited to a few very large trading families. Therefore the active banks competed enormously for a very limited group of names, but on these names competition was intense and during the height of the oil boom the amount of risk taken was quite impressive.