Hamad Saud al-Sayyari, governor of the Saudi Arabian Monetary Agency, yesterday sought to allay concern that Saudi banks might be dragged down by the collapsing stock market, saying regulatory safeguards would prevent them from being adversely affected.

The Arab world's largest stock exchange has lost nearly half its value - more than $380bn - since the end of February in a crash that has stunned millions of ordinary Saudi investors, and contributed to bearish sentiment across the Gulf. Awash with liquidity from the oil boom, banks in the region lent heavily towards stock market investments even as markets began overheating. Some banks also invested in the market themselves.