Middle East Situation | S&P: If Conflict Escalates, Gulf Region Banks May See Over $2 Trillion in Deposits Outflow

SighingCashier · 2026-03-18T02:28:14+00:00

S&P Global Ratings predicts that if Middle East conflict escalates, Gulf region banks could face $307 billion in deposit outflows. Although there are currently no signs of large-scale fund withdrawals, international lending institutions have suspended operations in the UAE, demonstrating the resilience of regional banks during crises.

SighingCashier

2026-03-18 02:28:14

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S&P Global Ratings estimates that if the Middle East conflict escalates further, banks in the Gulf region could face a domestic deposit outflow of $307 billion (approximately HKD 2.39 trillion). If the conflict persists long-term, it may trigger a transfer of funds within the same banking system to safer assets, leading to broader external and local capital withdrawals.

After the Iranian Revolutionary Guard threatened attacks on economic centers and banks related to the US and Israel, some international lenders have temporarily suspended most of their client-facing operations in the UAE.

According to the S&P report, there are currently no signs of large-scale foreign or local capital outflows from banks in the Gulf region. Since the outbreak of war in the area last month, these banks have demonstrated resilience.

The agency’s baseline scenario assumes that the most intense phase of the US and Israel’s war against Iran will last two to four weeks, although it acknowledged in a March 16 report that spillover effects and intermittent security incidents could last longer.

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