LONDON (MarketWatch) -- European banks could have as much as $40 billion of exposure to Dubai after helping to arrange a string of bonds and loans linked to the Middle East city-state, according to analysts at Credit Suisse.

The broker said it's identified $10 billion of bonds issued by the government's Dubai World investment vehicle just since 2005, along with a further $26 billion of syndicated loans.

Fears of a potential sovereign default by Dubai roiled financial markets Thursday, sinking stocks across Asia and Europe and pushing up government bond prices, after Dubai said late Wednesday it would restructure Dubai World and announced a six-month standstill on repayments of the conglomerate's debt. See full story on the impact on financial markets.

In a note to clients, Credit Suisse said the middle-East region is unlikely to be more than 1% to 2% of banks' total exposure and Dubai itself would just be a small part of that.

Still, it estimated that a 50% loss on the exposure that bank's may hold would be the equivalent of a 5% increase in provisions in 2010.

For the banks that Credit Suisse analysts cover, which could have an exposure of around 13 billion euros ($19.6 billion), that would equate to a combined hit of around 5 billion euros, it added.

Bookrunners on bond and loan deals typically retain around 10% to 15% of the issue on their own balance sheet, the broker said.

Among the European banks that frequently acted as bookrunners or participants in bond and loan deals were Barclays (BARC) BCS, +1.00% , Deutsche Bank (DBK) DB, +1.57% , Royal Bank of Scotland (RBS) RBS, -2.42% , BNP Paribas (BNP), ING Group (INGA) and Lloyds Banking Group (LLOY) LYG, +0.77% .

Standard Chartered (STAN) and HSBC (HSBA) HBC, +6.76% also have significant loan books in the Middle East.

U.S. banks that have been involved in bond or loan deals in Dubai include Bank of America BAC, +1.34% , Citigroup C, +1.62% and J.P. Morgan Chase JPM, +0.96% .

Shares in the European banking sector were down across the board, with ING -- down 7.1% -- and RBS -- down 8.6% -- among the biggest fallers.

A spokeswoman for Barclays said the bank's exposure is "not significant" and that it is closely monitoring the impact on broader markets.

A spokesman for ING said the group has negligible exposure to Dubai World bonds. He added ING participated in some loan deals, but that the group doesn't see any reason to change its forecasts for loan losses.

Standard Chartered said in a statement that it wouldn't comment on specific clients, adding "we are fully aware of our disclosure obligations, and would make a statement in the event that we had anything material to disclose."

Other banks either declined to comment or did not respond to emails and phone calls.