In a period of heightened uncertainty due to the escalation in the Middle East, Morningstar DBRS offers a dose of reassurance. According to its analysis, the direct and indirect effects of the conflict on international banks and asset managers remain, at this stage, manageable.
The key reason? Major banking institutions do not have material direct exposures to the Middle East region, limiting credit risk. However, indirect effects are expected to emerge through macroeconomic channels — affecting the quality of loan portfolios, growth rates, and monetary policy decisions.
Head of Credit Ratings Michael Driscoll warned that “if the conflict escalates or lasts longer than expected, we anticipate increased loan loss provisions and lower global economic growth.”
For asset managers, the risk is also considered limited, although development initiatives in the Middle East may be delayed. Smaller managers are deemed more vulnerable to prolonged instability. Overall, the main challenges lie in the potential macroeconomic consequences should the crisis escalate further.
