As the dispute between two of Saudi Arabia’s largest corporate conglomerates rumbles on, the strain on lenders in the Gulf—reportedly owed US$10bn by the groups—is showing. Already burdened with sour loans from a burst property bubble, the extra uncertainty over unpaid debts is unwelcome, to say the least.

Abdul Aziz al Ghurair, chief executive of Dubai-based Mashreqbank, one of the worst hit by the Saudi dispute, predicted recently that the region’s banks will not be “back and kicking” until 2011. Given the sharp rise in loan-loss provisions at local lenders this year—helpfully compiled by Zawya Dow Jones—that looks like a safe bet, a rare thing in the region these days.

Gulf banks Q3

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