William George, Managing Director of Investment Banking at Al-Khabeer Merchant Finance Corporation- a Saudi-based provider of innovative and Sharia’a-compliant financial solutions- presented a working paper on the future of the investment industry and the role of investment companies to develop it. The paper analyzed the added value, the reasons of resilience to past crises, the future development and necessary changes of investment banks.
William indicated that:
“The investment banking industry is vital to sustain an efficient capital market by developing information and liquidity networks in the market. In the past, investment banks have proven their resilience to economic and financial crises and have been able to overcome the downturns by creating innovative products and services, redeploying resources and expanding into new businesses and territories.”
“In today’s volatile and uncertain markets, where the crisis is redefining the industry and its competitive environment, investment banks need to concentrate on (1) managing their capitalization and liquidity; (2) realigning their strategies, and business models; (3) switching to more rational and stable compensation policies; (4) focusing on innovative solutions; and (5) managing increased regulations”, he said.
William added that: “Although the KSA’s capital market is relatively young, it has witnessed significant growth over the past years, and currently there are around 114 investment banks licensed by the Kingdom’s Capital Market Authority. Despite the current global crisis, the Kingdom’s economy is slowing down but we are not in a recession, and the latter is being pushed off by the corrective measures adopted by the Saudi Government to protect investments and other economic sectors, such as increasing the 2009 budget to SAR475bn, focusing on capital expenditure, and reducing interest rates”.
William George concluded that: “Investment banks must learn that market turbulence is part of the game and, in fact, often leads to new opportunities. We hope that our research in the investment field will help firms plan appropriately given today’s challenging business environment”.
Monday, June 1- 2009 @ 12:35 UAE local time (GMT+4) Replication or redistribution in whole or in part is expressly prohibited without the prior written consent of Mediaquest FZ LLC.