S&P Global warns that new banking ownership shifts and tighter liquidity regulations across emerging markets like Indonesia, Ukraine, and Brazil could increase funding costs and slow credit growth for smaller lenders in the near term.

Shifting Trends in Emerging Market Banking

Shifts in bank ownership and tighter liquidity and deposit-protection regulations are expected to reshape the emerging-market banking risk outlook, potentially raising funding costs and slowing credit growth, particularly among smaller lenders, according to S&P Global.

S&P Global highlighted, developments in Indonesia, Ukraine, Brazil, Egypt and Ghana will likely influence bank capital, funding conditions and lending capacity. "Sales of state-owned banks in Ukraine and Egypt, and a possible delay to bank IPOs in Indonesia, are likely to affect bank capital and funding," it said.

Impacts in Indonesia and Ukraine

The report noted that the potential removal of the Indonesia Stock Exchange (IDX) from the MSCI Emerging Markets Index could delay initial public offerings (IPOs) of Indonesian banks, as potential fund withdrawals may affect share valuations. This could impact the planned partial privatisation of state-owned Bank Jakarta in 2027, limiting its ability to raise capital and expand lending, it noted.

The report also noted, Ukraine's plans to advance the privatisation of Sense Bank and Ukrgasbank, following the establishment of a government commission on October 18 to oversee the sale of state holdings. As per S&P Global, "Successful privatizations would reduce the state's footprint in the banking sector, while providing a route for strategic investments into the country as part of post-conflict reconstruction efforts." It further noted, privatization would begin the process of "disentangling the sovereign-bank nexus," which includes state ownership of the largest banks in the sector, with Sense Bank and Ukrgasbank the smallest of these.

Regulatory Changes in Brazil, Egypt, and Ghana

In Brazil, authorities are expected to continue reviewing deposit-insurance and liquidity arrangements following the liquidation of Banco Master. The bank's financial stress has highlighted gaps in Brazil's deposit-protection framework and oversight of smaller lenders. "Tighter liquidity or funding requirements could also raise compliance costs and constrain balance-sheet growth among smaller banks," it noted.

Meanwhile, Egypt's Banque du Caire has priced its November IPO at 5.30 Egyptian pounds per share, with the offering expected to raise approximately USD 658 million through the sale of a stake of up to 45 per cent. The transaction is expected to strengthen the capital and liquidity position of state-owned Banque Misr, the bank's largest shareholder, which will receive the IPO and divestment proceeds.

In Ghana, commercial banks are scheduled to implement a liquidity coverage ratio (LCR) from September 2027, aligning domestic regulations more closely with Basel III standards. The proposed framework requires banks to maintain a minimum LCR of 100 per cent and hold high-quality liquid assets to cover potential funding pressures. Ghanaian banks will likely increase their holdings of domestic sovereign securities, potentially moderating credit growth while strengthening liquidity management and reducing bank-run risks.

Overall, "These changes should strengthen resilience over time, but they may raise compliance costs and slow credit growth for smaller banks," S&P Global noted.

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