Monday 25 June 2018

Global banking industry 'set to bounce back'

Manama, November 6, 2008

The global banking industry will get back down to business in the first quarter of next year, Ithmaar Bank chairman Khalid Janahi predicted on Wednesday.

But he said that this would be achieved by investing in the real economy rather than the dream economy of structured investment products and the kinds of pieces of paper that brought down giants like Lehman Brothers, said a report in our sister publication, the Gulf Daily News.

"The past 10 weeks have seen the financial map of the world change," he told the American Chamber of Commerce in Bahrain at the InterContinental Regency Hotel on Wednesday.

"Ten weeks ago John McCain could have won the presidency. For the past 40 years the Republicans have been the business friendly party and under Reaganism we all did good business.

"But I believe that Barack Obama is the right choice this time and I hope he will be re-elected.

"We have moved from Uncle Sam to Uncle Hussein."

"This is not only a great news for the world it is great news for the US. The first African American president of the US is a great achievement for the people of America."

He said that people from this region had put their money into the US to make money, and then blamed Wall Street when things went wrong.

"The US created this crisis and it will be the US that takes us out of it. Whether that is in six months, 12 months of two years it will be the US unless we play a role in it. Otherwise we will benefit - four years later."

He said that the financial crisis meant that the US would no longer lead the global economy. That would be done by blocks of powerful wealth nations.

"That's good for us and good for the US because it means the world no longer look to the US to solve all its problems," he said.

"China is much stronger and Russia has a fantastic opportunity to be a player. Europe to a lesser extent.

"We in the Middle East have an opportunity to be a partner rather than on the periphery.

"We have an opportunity to sit at the table. Will we? Probably not.

"I do not blame the elite. We tend to react rather than be proactive.

"There is a real economy and a dream economy. There are fantastic buys with under priced assets out there. Warren Buffet is buying and so should we.

"We should be investing in our own economies and supporting our own entrepreneurs, and doing it now.

"The dream economy survived on structured investment vehicles and paper which led to the collapse of Lehman Brothers.

"That has gone and it's not coming back.

"We have to concentrate on real economy and invest in the real economy at home rather than options and derivatives.

"We need to be positive rather than negative," he said.

"A lot of people and banks are sitting on a lot of money and it is time to get back to normal and lend and invest.

"Otherwise, if the banking system collapses, as we say in Arabic, the kingdom has come."

He said the Middle East was following too late sitting worrying about liquidity.

"Governments here are reacting rather than being proactive," he said.

"They have reserves outside the region. Part of these reserves should come back now, in the next two to three months and be invested here."

He predicted that in the short term there would be consolidation and mergers and takeovers in the Bahrain financial markets.

"Bahrain has always been the leader in the financial world in the region," he added.

"Consolidation has happened in Dubai and Abu Dhabi not because they wanted to but because they had to.

"In Bahrain it will happen not because it has to but because it is good." - TradeArabia News Service

Tags: Lehman Brothers | global banking industry | Ithmaar Bank chairman Khalid Janahi |

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