Nov. 29--Standard Chartered is one UK bank that managed to avoid the pitfalls of lending too much money here or getting involved in the US loans bonanza that went so wrong.

But last week a palm-shaped shadow was cast over the group when Dubai called for a moratorium on debt repayments by the state-owned Dubai World.

The news knocked many British banks, but by this weekend it was becoming clear that the risk to their balance sheets was set to be modest.

The majority of bank shares recovered some of their losses, but those seen to be most exposed all lost ground over the five days. HSBC and Royal Bank of Scotland were down 3.5 per cent while Standard Chartered, thought to have the biggest exposure to Dubai as a proportion of its loan book, fell six per cent.

While a pause for thought allowed the markets to make a calmer appraisal, there is no doubt that more turbulence is to come, simply because the full ramifications of the Dubai statement are so unclear.

Many hope that Abu Dhabi, its neighbour and the lead state in the United Arab Emirates, will come to Dubai's rescue. The pessimists are muttering about a sovereign debt default. As ever, the truth probably lies somewhere between. What is most interesting is that we might be seeing the start of a subtle but significant change in the Gulf states" financial landscape.

In recent years they have used state-owned firms to acquire a dizzying array of UK assets, from container ports to stakes in High Street banks. Throughout this, the lines between the royal families, giant firms and governments of these states have often been blurred in the public mind, and for good reason.

Sheikh Mohammed bin Rashid Al Maktoum is Emir of Dubai, prime minister of the UAE and the biggest shareholder in most of its largest firms.

The distinction is naturally blurred and, not unreasonably, it is assumed a company is really just the business face of a royal family member or the state.

This lack of clarity over Gulf finances has led to a perception that loans to these companies were as cast-iron as sovereign debt. This has encouraged their bosses to be reckless and to operate outside normal commercial boundaries.

But it is just possible that what is happening over Dubai World is the start of cultural shift in which the lines are being drawn more sharply between the wealth and assets of individuals, the state coffers and companies.

While welcome in the long run, an adjustment to a more commercial distinction between personal, state and corporate money could be painful, not just in the Gulf but also for the Western banks that lent money to these corporate monarchies.

The analysts think the immediate outlook will involve at worst a bearable amount of financial pain. Let us hope they are right.

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