JEDDAH: The global economic and financial crisis has dampened equity issuance and foreign investment in Saudi Arabia. Debt capital markets are in a nascent stage of development and private equity investment has retreated. “All this underscores the continued critical importance of the banking sector in providing funding for Saudi industry. However, recent macroeconomic and monetary movements have raised questions about Saudi banks’ ability and willingness to perform this function to the desired degree,” Jarmo T. Kotilaine, chief economist of NCB Capital, said in his presentation at the two-day 3rd Saudi International Banking and Investment Conference (SIBIC 2009), which concluded yesterday.
Speaking on “Debt funding capacity of the Kingdom’s banking sector,” Kotilaine discussed the sector’s capacity for funding the Kingdom’s growth, alternative sources of financing and potential steps to increase bank lending. He said bank funding was critical for the Kingdom’s economic growth and, in fact, funding needed to grow in spite of the economic slowdown.
“Every economic crisis comes with an opportunity, which should be utilized to help the process of recovery,” he said and emphasized that the Kingdom’s banks were healthy in the face of the global crisis. “The Saudi economy will be among the first to bounce back once a global recovery gets underway,” Kotilaine added.
Faysal bin Ibrahim Alaquil, manager of business development at Construction Products Holding Co., said the Kingdom’s policies were meant to encourage investment and support the private sector to be a strategic partner in the development process. “The challenges of the current financial crisis shows how fragile are the economies of some countries,” he said, adding that investors should look for secured and stable places and study the policies of countries open for investments.
Hasan Al-Jabri, NCB Capital’s managing director and head of investment banking, spoke about the impact of economic turbulence on the Saudi capital markets and discussed the emerging trends and resultant opportunity framework for inorganic and organic growth. He presented an overview of the real estate sector and offered solutions for its developers and investors.
William George, head of investment banking, Al-Khabeer, outlined the reaction of the global investment banks to the changing conditions and past upheavals. He suggested the necessary changes to the investment banking landscape and discussed the future direction of the Saudi investment banks.
He suggested steps to improve the capital market efficiency. He favored promoting sukuk and bonds as an efficient alternative way to raise capital for companies, alternative products for investors with low risk profile. Above all, he strongly recommended for the continuance of education and awareness among investors.
Adel A. Shakoor, president of XS Conferences and Exhibitions, which organized the event, said the support of Prince Sultan College for Tourism and Business and the financial stock committee of JCCI added more value and credibility to the conference.
