The United States Federal Reserve plans to subject large foreign banks to the same rigorous standards applied to U.S. banks. This includes subjecting them to stress tests.
Draft rules were unveiled Friday and obtained by the media. The new rules, which if finalized will come into effect on July 1, 2015, would apply to around 107 foreign banks, and another 26 or 27 foreign non-bank financial institutions.
It says foreign banks with global assets of more than $50 billion that are active inside the United States will be subject to credit-exposure limits under the regulations, with more lenient rules for smaller foreign banks.
The regulatory regime that was tightened for U.S. banks in the wake of the financial crisis four years ago would be effectively extended to foreign banks doing business in the United States.
But what does it mean for Gulf stocks. The Gulfnews says this year the aggregate index, S&P GCC, has hardly gone along with the generalized lift in international equity prices, mostly due to concerns over the regions stability.
Kamco’s latest monthly review shows political issues restrained Saudi Arabia, Kuwait and Bahrain bourses, while Oman lacked local catalysts. Qatar has revealed the gap between economic, financial and equity market conditions, with UAE markets clearly outperformed.
The apparent separation of Gulf markets is beneficial, but there’s still time to see how detached Gulf stocks will remain.