Bahrain’s bankers warn of liquidity crunch

Bahrain's bankers have sounded an alert over the impact of continuing unrest on jobs and liquidity, warning that continued unrest may have an adverse effect on the economy.

They said that the banking and financial sectors are on a strong footing at the moment, but the situation could lead to a liquidity crunch, affecting banks' transactions with foreign financial institutions and their borrowing capacity.

A prolonged political impasse may result in losses for banks, which may in turn be forced to lay off staff, bankers said.

Global financial monitors may also downgrade the kingdom's rating if the turmoil continues, said the report.

Bahrain's currency exchanges have already reported a 20 per cent drop in transactions. They said that the availability of GCC currencies has also declined owing to a fall in the number of GCC nationals visiting Bahrain. This has affected the kingdom's tourism sector badly.

Sources said that the present situation has adversely affected trading at Bahrain Bourse.