The Central Bank of Bahrain (CBB) is currently assessing what, if any impact, the collapse of Lehman Brothers will have in Bahrain.

But CBB executive director banking supervision Khalid Hamad on Tuesday emphasised that there was no liquidity problem in the banking sector, unlike in the US and Europe, said a report in our sister publication, the Gulf Daily News.

'Banks do not have a problem with liquidity here,' he said. 'Liquidity is not an issue in the region where the economy is booming.'

He said that there were a large number of international banks and institutions in Bahrain who could have had exposure to Lehman Brothers but that assessing the significance of any exposure would take some time.

That was a view echoed across the GCC on Tuesday.

Banks in Saudi Arabia appear to have avoided any serious damage according to central bank governor Hamad Saud Al Sayyari, though he cautioned that the crisis was only one day old.

Qatar Central bank governor Shaikh Abdullah bin Saud Al Thani said banks in Qatar had no exposure at all to Lehman Brothers, a sentiment echoed by UAE central bank governor Sultan Nasser Al Suweidi and his Oman counterpart, Hamud bin Sangur Al Zadjali.

The head of the Kuwait Banking Association Abdul Majeed Al Shatti added that he doubted lenders in his country had any exposure.

The Gulf region is not isolated from the global economic crisis, but it is well insulated, according to Standard Chartered Bank economist for the Middle East and North Africa Mary Nicola.

'No man is an island but the region is awash with liquidity on the back of strong growth and high oil prices,' she said.

'The key question is how will the global slowdown affect the region? The world's largest economy, Europe and Japan are all facing a slowdown and if this happen in China we will see a trickle down effect here.

'I do not believe we are de-coupled from what is happening in the west but we are insulated.'

The region remains spoiled for choice when it comes to investment banking with around 10 major players operating in the region, according to one investment expert who asked not to be named.

'There are still plenty of good advisers available for the financial industry available to the industry across the region and I am sure the Lehman Brothers staff in Dubai will be snapped up by other institutions,' he said.

'There is certainly no liquidity problem for the regional banking industry as a result of this,' he added. - TradeArabia News Service