Bahraini banks may require support if regional conflict arises
Bahraini banks could face a funding shortfall of $1.9 billion as of year-end 2025, in the event of a full-blown US-Iran conflict, threatening GCC stability and capital flows, according to recent analysis.
The kingdom’s absolute funding shortfall, which will total 8% of its external assets after assumed haircuts, will be a steep decline from a $1.7 billion surplus in 2024, S&P Global said in a stress analysis report published on Tuesday. A haircut refers to a reduction applied to the value of an asset in percentage terms.
Under a severe stress scenario where GCC lenders could face external funding outflows, Bahraini lenders may require domestic or regional support.
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