In September, after the previous failure and bail-out of FC Otkritie, B&N bank experienced a significant liquidity squeeze
and was rescued by the Central Bank of Russia (CBR), through the banking sector consolidation fund and without any losses for senior creditors.
Greek lenders were forced to rely on central bank borrowing to deal with a liquidity squeeze
after a flight of deposits in 2015.
Furthermore, banks are witnessing a steep rise in funding costs due to the liquidity squeeze
across the sector.
Domestic interbank rates have risen as the domestic liquidity squeeze
takes hold, which would have knock-on effects on the capacity of these banks to fund the government deficit.
The liquidity that is expected to be injected into the Saudi economy will help alleviate the liquidity squeeze
on Saudi banks, allowing them to maintain growth projections over the short term.
Summary: Tighter monetary policy and liquidity squeeze
expected to weigh on GCC banks, explains Jaap Meijer, Managing Director, Equity Research at Arqaam Capital
We find that the year-end rate increase from the liquidity squeeze
is smaller in magnitude and shorter in duration in directly placed than in dealer-placed CP.
This could trigger higher market volatility, raising the risk of disorderly adjustments, and the possibility of a sudden liquidity squeeze
wherein markets retreat during the transition period," warned Tetangco.
With some operators imposing cost reductions of 25% and seeking to extend supplier terms, this could create a liquidity squeeze
that will ripple down the supply chain.
We expect that the government will survive the current liquidity squeeze
without running arrears on debt obligations, but the heightened risks have led us to downgrade the ratings," the agency said.
Firstly, due to the 2013 low base that was shaped by the March Eurogroup decisions and the following liquidity squeeze
BofA Merrill Lynch sees liquidity squeeze
in long term, rebound in Dubai's GDP broad-based