Asia Macro Insights

Latest edition · September 29, 2026

Asian banks loans to the GCC from fast lane to hard stop

Asian bank lending to the GCC has ground to a near standstill in 2026, reaching only 26% of 2025 total volumes as conflict and risk aversion take hold. GCC funding costs have remained relatively insulated so far as Saudi megaproject scale-backs and lower oil output have suppressed credit demand.

After rapid expansion between 2019 and early 2026—led by Hong Kong and Chinese banking entities—Asian syndicated lending to GCC borrowers has abruptly contracted, totaling just 26% of 2025 levels through September 2026. Nearly four-fifths of that volume closed before May, prior to the realization of an extended war. Despite this Asian pullback, GCC funding costs have risen only marginally, as Saudi Arabian banks' foreign liabilities growth slowed from ~60% YoY in January to under 20% in July due to scaled-down gigaprojects (such as The Line and Trojena) and lower oil production dampening trade finance needs. However, persistent conflict and hawkish Fed monetary policy pose substantial dollar liquidity risks ahead.

Key takeaways from the latest edition

• 1.Asian syndicated cross-border lending to GCC borrowers has hit a hard stop in 2026, reaching only 26% of its 2025 total as of September, with 78% of 2026 volume signed between January and April.
• 2.Hong Kong lenders have shown relative resilience, reaching almost half of their 2025 total, while Mainland Chinese and Japanese banks reached only about a fifth of their 2025 volumes.
• 3.Borrowing costs have not surged despite the drop in Asian lending because GCC credit demand softened as major Saudi infrastructure projects scaled back and lower oil production curtailed trade finance.

What this series covers

• Asia has become an important lender to the Gulf Cooperation Council (GCC)
• Syndicated loans: from fast lane to hard stop
• No surge in funding costs yet

Edition archive

• Asian banks loans to the GCC from fast lane to hard stop

  September 29, 2026

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