The GCC has enjoyed vigorous growth in the banking sector, with the exception of Saudi Arabia that suffered the aftershocks of the 2006 downturn in its stock market. These profits have been driven by record high oil prices across the region, better regulation practices (e.g. Basel II), financial diversification, and nationalization. Basel II acts as an internationally standardized regulatory accord to manage credit risk, improve transparency, and strengthen the overall stability of financial systems. The GCC’s recent implementation of Basel II will alter how banks lend money, and to which countries they lend it to. With this standard on their backs, banks will have to invest abundantly to upgrade their IT systems and consultancy fees in order to comply with the new regiments. Basel II compliance will also encourage banks to liberalize their policies, be more transparent with their balance sheets and to manage their risks more effectively. Floating on
