By Lawrence White and Selena Li
LONDON/HONG KONG, March 12 (Reuters) – Just days before the U.S. and Israel launched strikes on Iran, HSBC’s CEO Georges Elhedery said the Asia-Middle East corridor was becoming “a defining axis of global growth”.
This week, HSBC closed its Qatar branches while Standard Chartered evacuated its Dubai office and told staff there to work from home, in a sign of how the conflict has rattled their day-to-day activities and their ambitions.
The duo, which have both bet on the region’s increasing trade with Asia and other markets to fuel their growth, are two of the global banks most exposed to the war with Iran, according to Reuters analysis of company data and sector analysts.
While the share of their assets in the region is around 2%-3% of their global lending, that belies the strategic importance of the growing financial hubs of Dubai, Riyadh and Abu Dhabi to the trade-focused British banks.
HSBC shares dropped more than 6% on Thursday, bringing the falls since the U.S. and Israel struck Iran on February 28 to 14%. StanChart shares are down about 11.4% against a 9.5% drop in the wider STOXX Europe banks index over that period.
“Our network has proven to be adaptable and resilient, allowing us to stay close to our clients, respond quickly to their needs and continue enabling trade, capital, wealth and investment flows across our markets,” a spokesperson for StanChart said of its Middle East exposure.
HSBC referred to a statement from Elhedery this week, which said it remained confident in the region and its prospects.
Other international banks including JPMorgan and Citigroup have been expanding in the Gulf too.
JPMorgan’s financial exposure in the UAE doubled to $5.7 billion between 2024 and 2025, regulatory filings show, although that ranks the UAE as eighteenth in a list of the top 20 country exposures for the bank outside of the United States.
Citigroup’s UAE exposure is bigger, at $17.3 billion at the end of 2025, but has been growing more slowly. Citigroup said on Thursday it would temporarily close most of its UAE branches and financial centres as a precautionary measure.
CHINA-MIDDLE EASTERN TRADE
StanChart, whose Middle East operations are based in Dubai, has seen its UAE business grow from 3.7% to 5.7% of overall group income in the last 5 years, an analysis of its statements shows, and its share of assets hold steady at around 2.4%.
JPMorgan analysts on Thursday forecast Middle Eastern exposure for StanChart’s revenue and profit before tax to be about 8% and 12%, respectively, and for HSBC at about 4%. They said both banks were the most exposed among European lenders.
Business volumes between China and the Middle East rose 18% in the last year, Manus Costello, StanChart’s global head of investor relations, told Reuters last month.
That means any risks to inter-regional trade as the conflict shuts down airspace, hurts business confidence and stokes geopolitical tensions, could have an outsized impact.
“We think the increased economic uncertainty could imply some additional risks related to the Groups’ trade finance and credit costs,” Kathy Chan, equity analyst at Morningstar said.
StanChart should be somewhat insulated from severe credit losses in the region because 73% of its UAE exposure is to government-related entities and banks, JPMorgan analysts added.
Neither bank discloses its direct exposure to the Middle East, but StanChart’s UAE business and HSBC’s Saudi Arabia-based regional entity HSBC Bank Middle East can be used as proxies, the analysts said.
The banks could also benefit from the disruption as it drives demand for services including foreign exchange and cash management, said Hargreaves Lansdown analyst Matt Britzman.
(Reporting by Lawrence White in London, Selena Li and Sumeet Chatterjee in Hong Kong; Additional reporting by Lananh Nguyen in New York; Editing by Tommy Reggiori Wilkes and Alexander Smith)
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