Gulf likely to see new wave of capital repatriation from US

The Gulf could see a new wave of capital repatriation from the United States and Europe following the global crisis, the speaker of the UAE council.

"The current turmoil and apparent failure of regulators, markets and institutions in the West may cause investors from the region, whether public or private, to rethink their strategies and question how reliable they are," Abdul Aziz Al Ghurair, Speaker of the Federal National Council (FNC) said yesterday.

"Just as they did after 2001, regional investors may, again, shift more of their assets back into regional markets," Ghurair, who is also the chairman of Mashreq, Dubai's largest bank by market value, told a conference.

Repatriation of billions of dollars of private wealth back to the Gulf region following the September 11, 2001, attacks in the United States and subsequent stringent banking legislation helped boost regional capital markets in the early part of this decade.

Ghurair, whose family ranks among the world's wealthiest according to the Forbes rich list, said the turnaround in the Gulf would be quicker than in Europe or the United States where it takes a long time to halt and then reverse an economic slowdown due to the size of the economies.

"In the smaller, more agile economies of the Gulf, the turnaround can happen much more quickly," he said.

Governments across the Gulf have mobilised over the last two weeks to introduce measures to shield regional banks from the worst effects of the current crisis.

"Financial institutions in the Gulf are not allowed to invest in many of the questionable asset classes that caused such gaping holes in balance sheets elsewhere," he said.

Bank reserve requirements here are much higher than in other regions, he added.