Doha Bank's CEO highlights current global crisis

The delegation was organized under the patronage of H.E. Richard Olson, US Ambassador to United Arab Emirates on 6th May 2009 at Houston, USA.

H.E. Richard Olson in his address outlined the growing economic prospects in all the Gulf States with particular emphasis on showcasing the opportunities available in Abu-Dhabi.

Mr. R. Seetharaman, Chief Executive Officer - Doha Bank during his address highlighted the current global crisis, its impact on the functioning of the global economy, the financial stability of the world economies and the economic outlook on the world economies in consideration to the current financial crisis. Further, he also explained the changes in the economic profile of countries and blocs.

He analyzed the financial leverage that had taken place in the west resulting in growth of hybrid products, like derivatives, the creative accounting practices evolved on account of these hybrid-products etc.

Mr. Seetharaman explained what the global financial crisis meant to real commodity driven economies including the economies of GCC states, who together jointly control 45% of world oil reserves and 18% of world natural gas reserves.

He said "Real commodity driven economies are experiencing increased cost of procurement of funds, volatility in securities market owing to market sentiments playing a bigger role than the underlying fundamentals, reduced cash flows for businesses owing to the clog in the credit markets, likely rise in credit losses, increased balance sheet risks due to asset price deflations, likely reduction in trade freedom and shifting consumer behaviour, all requiring more government intervention and."

Mr. Seetharaman while explaining the measures and vision for tomorrow to factor the learning from this ongoing financial crisis said, "World growth is projected to be negative 1.3% in 2009, its lowest rate ever since World War II. Despite wide-ranging policy actions, financial strains remain acute, pulling down the real economies. A sustained economic recovery is possible only with the restoration of the financial sector's functionality and unclogging of credit markets."

"This requires new policy initiatives to produce credible loan loss recognitions, more public-private partnership by extending support to the financial sector by injection of capital and carving bad assets; and the policy changes that are required at a macro-economic level and financial/monetary level to come out of the current financial crisis. Monetary and fiscal policies need to become even more supportive of aggregate demand and sustain this stance over the foreseeable future, while developing strategies to ensure long-term fiscal sustainability," he added.

"Moreover, the role of money-market including inter-bank placements & deposits in the coming days should be given more thrust to ensure liquidity within the system. Further, issuance of Sukuk which are backed by underlying assets and similar instruments should be encouraged to ensure long-term sustainability of liquidity in the system. All the more international cooperation will be critical in designing and implementing these policies and measures for a stronger future," he said.

Mr. Seetharaman continued highlighting the proactive measures taken by various GCC governments and in specific the government of State of Qatar to monitor and manage the current situation. He also explained the measures required to be implemented by the financial institutions to tide over this ongoing global financial crisis.

He said, "All the institutions should introduce crisis monitoring team, tighten their cash management system, allow credit expansion subject to thorough risk evaluation, initiate key working capital initiatives, look for opportunities to restructure debts, focus on cost & organizational efficiency, keep real-time communication with all stakeholders and adapt product portfolio to changing consumer behaviour."

Mr. Seetharaman, while elaborating on USA-Qatar-GCC relationship, detailed various fields where the joint relationships are playing an important role. He highlighted the development projects that are been currently undergoing in the State of Qatar and other GCC states including establishment of Financial Centers, setting up of world-renowned educational institutions etc. He laid special emphasis on the pivotal role played by the five world class universities from United States operating in the State of Qatar and similar educational institutions operating across other GCC states.

He also highlighted US corporate active contribution and participation in the hydro-carbon sector in the GCC region.

Encouraging the entire US corporate and individuals to explore further boosting of their strong relations, Mr. Seetharaman said, "State of Qatar, other GCC states and USA are logical partners, we should always explore new avenues for mutual synergy and benefits. GCC states in addition to their own intrinsic attractiveness such as liberal investment regime, friendly government policies, infrastructure, abundance of resources and manpower, are also very strategically located right in the middle of Asia and Africa - proximity to two huge markets. With all such ingredients, State of Qatar and other GCC states provide immense opportunities for global companies."

In his concluding remarks, Mr. Seetharaman said, "The ongoing global financial crisis is indeed an opportunity for all the real commodity driven economies one like State of Qatar and other GCC states to showcase their fundamental strengths and with pro-active implementation of all the required measures we will come out of the crisis stronger and make our future prosperous. The new world order has indeed created new challenging opportunities."