Domestic liquidity constraints forcing emerging-market banks to internationalize funding sources faster than historical precedent

str 8 1/20/2026 · 1 article

structural · economic · Finance · SA

Analysis

Saudi banks' international borrowing tripled year-over-year to $33bn in 2025 as domestic deposit growth failed to keep pace with credit expansion driven by state megaproject financing. This signals a structural shift: when state-directed development outpaces domestic savings mobilization, banks are forced into foreign capital markets at accelerating rates, creating new cross-border financial dependencies.

Key actors

Saudi banksSAMAFitch Ratings

Source article

Saudi banks borrow abroad at fastest ever pace

Financial Times — World Order and Systems · 1/20/2026 · extracted in run pdf-import-2026-01-20-1779224753682-7 · 5/19/2026, 9:39:00 PM

"The kingdom's lenders collectively borrowed about $33bn in 2025, roughly three times the previous high of $10.5bn set the year before" [$33bn]

The $33bn figure quantifies the tripling of international borrowing in a single year, directly evidencing the 'fastest ever pace' mechanism the signal claims is structural rather than cyclical.

Reasoning from this article

The article frames this not as a temporary funding gap but as a structural mismatch: credit growth has 'outpaced the growth of deposits' and banks are 'unable to match' liability-side growth with capital generation. The loan-to-deposit ratio of 106% (vs. 75% in UAE) indicates Saudi banks have hit a domestic funding ceiling. This pattern—state-directed development exhausting domestic savings, forcing banks abroad—is generalizable to other oil-rich states pursuing diversification under fiscal pressure.