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MENAFN - Arab Times - 13/04/2011

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(MENAFN - Arab Times) The Kuwaiti banks are in a good position, while having good liquidity rates in spite of the many questions posed on the volume of allocations within them, Chief Executive Officer (CEO) of Gulf Bank Michel Accad said Monday.

Accad attributed the non growth of credit rates at Kuwaiti banks to the non-existence of profitable projects on the part of investors and not to the banks' inability to offer loans.

Accad made the remark at a conference titled "Financing Development and Developing Finance" which is organized by the Kuwaiti Banking Association, and Euromoney Foundation.

He added that commercial banks today are well-placed, and they had all their allocations including the Gulf Bank which had its total allocations amounting to USD two billion over the past two years.

However, he said that there are some minor questions which affect the banking sector, and may cause a problem if they are put together including the banks' inability to provide loans in exchange for residential property guarantees, the necessity of getting the approval of the banking regulator, the central bank, when there is a need to impose any fees.

Accad made clear that the financial crisis of 2008 was the cause behind the Central Bank of Kuwait's (CBK) toughening of several laws in order to avert another crisis, calling for allowing better pricing of banking derivatives in what gives room to competitiveness.

He also said that foreign banks' willingness to subscribe as investors in the Kuwaiti banks, and get quotas in them greatly rely on the flexibility of local laws as foreign banks are allowed to open only one branch at the Kuwaiti market up till now.

There should be a more realistic scenario regarding the development plan as funds which will be defrayed within the plan may take some time to benefit the general economic system, while attracting foreign investors depends on the good structure set for the plan's gigantic projects and firms, Accad said.

Meanwhile, Chief Financial Officer of Global Investment House (GIH) Sunny Bhatia said that the Kuwaiti banking sector did not reach the point of saturation yet, and it can absorb more banks compared to other Gulf Cooperation Council (GCC) Arab states.

Bhatia added that investment firms provided big opportunity to investors to diversify their investments, and also provided an opportunity to companies and individuals to diversify their services, and get access to various financial markets.

Bhatia noted that there are several investment firms subjecting to restructuring process of debts because many of their previous activities were not controlled by the Central Bank of Kuwait (CBK) including the laws related to the capital sufficiency, while nowadays there are laws determining volume of liquidity, and loans rates.

Bhatia said that there is a bright future awaiting investment commerical banks, adding that such banks have a well-placed budget in spite of what took place in the recent years, and expecting them to move again, in the coming couple of years, toward to giving loans to development projects in what creates new credit opportunities.

Finally, Bhatia called for consolidating partnership between public and private sectors because need for setting up projects for health care, education, housing, and infrastructure will give a new boost to growth and development of banking industry.

 






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