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A joint investment fund between State Bank of India (SBI) and the government will be launched formally in March.

Iraq’s banking sector is looking up as it profits from an upturn in regional trade deals, but local institutions remain under-capitalised, leaving them too weak to play a big role in the large-scale financing deals expected to materialise as reconstruction accelerates. Some consolidation is needed to address this challenge, bankers told GSN.

According to the latest Moody’s Investors Service report, Islamic finance is enjoying soaring demand, but requires more sophistication. Abu Dhabi Islamic Bank chief executive Tirad Mahmoud has said that Islamic finance will continue to grow despite the current global financial crisis. Jeddah-based Islamic Chamber of Commerce and Industry (ICCI) has announced plans to establish an Islamic bank. The Islamic Development Bank (IDB) has agreed to lend Tunisia a $195m to build two gas turbines.

New structures are required, and participating bank numbers may be reduced, but the GCC’s syndicated loan market should hit its stride again in 2009, according to project financiers canvassed by GSN.

Finance Minister Mustapha Al-Shamali and Kuwait Investment Authority (KIA) managing director Bader Al-Saad have reportedly been asked by Kuwaiti investment companies to set up a fund worth KD300m ($1.1bn) to help settle their debt in the wake of the global financial crisis.

Gulf financial institutions have been exposed to US defaults, but on a relatively small scale. Worst-affected have been Dubai and Bahrain, with Qatar and Saudi Arabia apparently the least-affected. Foreign banks have slowed down their lending dramatically and local banks are having their international credit lines pulled, causing them to freeze inter-bank lending.

GCC policy-makers are taking decisive steps to shore up confidence, as local markets suffer from global financial meltdown, tumbling oil prices and wavering enthusiasm. In articles below, GSN talks to key GCC and international players about the regional impacts of a global crisis. Troubled institutions can expect support, but US banks

Recent data from the Abu Dhabi-based Arab Monetary Fund shows that Arab stock markets lost some $158bn in September, with the GCC’s bourses taking the brunt of the loss. A new Standard & Poor’s (S&P) report argues that the tightening in liquidity conditions in the UAE is only tangentially related to the global credit crunch and is being driven mainly by a host of country-specific factors.

The real estate sector has been hit hard by the cut backs in lending but demand for new projects remains strong.

Turbulent times push everyone to buck up their thinking – and in this respect, Gulf Co-operation Council governments are no different from their international counterparts. Soaring oil revenues may provide Arabian states with a wealth cushion against global volatility; but an economic storm

Following on plans to establish an investment fund with Indonesia (GSN 835/15), Qatar and Vietnam have announced a $1bn fund to invest in various sectors including agriculture. According to Vietnamese ambassador Phung The Long, Qatar Investment Authority will provide 90% of the fund’s equity. “We have exchanged

Dubai Group (DG), which is owned by UAE government investment vehicle Dubai Holding, has been on a spending spree this summer. It has purchased a 5.24% stake in one of Egypt’s largest banks, Commercial International Bank, for Dh580m ($157.9m). Egypt has attracted a number of investors from the Gulf looking to tap the potential of its largely underdeveloped financial sector. With the government not issuing new licenses, Gulf investors are left with no choice but to buy stakes in banks. DG chief executive Thomas Volpe said the group planned another four acquisitions before the year’s end.

Ratings agency Moody's Investors Service has published a report in which it responds to ten frequently asked questions about recent