‘Gulf, Arab banks safe from global financial crisis’October 2nd, 2008 - 5:29 pm ICT by IANS
Dubai, Oct 2 (IANS) Gulf and Arab banks will be completely safe from the ongoing global financial crisis triggered by the US credit crunch, according to the head of a regional banking forum.Adnan Ahmed Yousif, chairman of the Union of Arab Banks, said in a statement that banks in the region are expected to record an increase of 20 percent in their cumulative budgets to reach $2 trillion, the state-run Bahrain News Agency (BNA) reported.
He said that Arab banks in general did not face any problem on the surplus in foreign currencies, which was the base for the crisis in the West, adding that a number of Gulf central banks were ready to pump money into markets if needed.
Interest rates in Arab banks dropped by 50 percent last week from levels ranging between 7-8 percent to reach 4 percent, which indicated the abundance of liquidity and cash surplus at a time where global markets face a heavy crisis, the bank union chief said.
Another reason, he said, the Arab banks were safe was their limited shares in Western banks hit by the crisis.
Yousif, however, described the $700-billion bailout plan passed by the US Senate Wednesday as a sedative, adding that the crisis is likely to affect the global markets for at least five years to come.
The $700-billion bailout money will only resolve a minor portion of the problem, making it a frail figure in comparison to the volume of the crisis, he added.
However, he rejected the view that the crisis would be the beginning of the end for capitalism.
“The crisis was not a failure for capitalism as much as it was a misuse of gaps in this system regarding humongous loans given by foreign banks,” he was quoted as saying.