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Discuss this article (11 Comments)Senior business figure's stark warning over lending
by This email address is being protected from spam bots, you need Javascript enabled to view it on Wednesday, 29 April 2009
LENDING FEAR: Mishal Kanoo fears that UAE banks' reluctance to lend is hurting the economy. (ITP Images)
Banks’ unwillingness to lend is paralysing business in the UAE and risks prolonging the downturn, a senior business leader has warned.
Mishal Kanoo, deputy chairman of conglomerate The Kanoo Group, which has operations in everything from travel to machinery and oil and gas, heaped blame on international and local lenders in the country and said they did not ‘trust’ the companies and individuals, to whom they lend.
“Start being the backbone of the economy, because if you don’t you will crush us [business],” Kanoo said.
Related: Blame it on the bankers
“If the banks don’t get over this issue of trust and start to lend, businesses will not function, they will collapse, and subsequently they won’t get paid and they will have to write it [debt] off. If banks don’t start lending you are going to have a severe, economic downturn,” he added.
Bank lending has evaporated in recent months due to a liquidity squeeze hitting businesses and the home loan market.
But there are signs the liquidity situation is improving. On Tuesday it emerged that mortgage giants Amlak and Tamweel, which both went out of business in October, will be recapitalised with government funds.
Earlier this month, HSBC reduced the minimum salary required to get a personal loan in the UAE to AED10,000 ($2,723) from AED20,000, in a further sign that liquidity is returning to the banking system.
Kanoo called on the banks to declare any losses they may have, recapitalise their balance sheets and resume lending responsibly.
“They made a major screw up in the past. If I were them, I’d declare it, write it off and move forward,” he said.
Kanoo stepped down as CEO from family run, Bahrain-based The Kanoo Group in 1997 and now focuses solely on the company’s UAE operations.
READERS' COMMENTS
Disclaimer: The views expressed here by our readers are not necessarily shared by ArabianBusiness.com or its employees.
Move forward – The key message
Posted by Tristan de Ferluc, Abu Dhabi, UAE on Friday 1 May 2009 at 12:17 UAE time
I remember reading “In search of excellence” written by Tom Peters some 25 years ago. In this excellent book, he was telling us a short story about Tom Watson, a former MD or President of IBM who hired a brilliant young treasurer. This young gentleman lost $10m (a fortune at that time) and went to Tom Watson’s office to resign. As he was not in his office, he left his resignation letter on his desk. When Tom Watson came back and found the letter he walked to the gentleman’ office and asked him : what is it ? The young man answered it was his resignation letter as there was no other possible attitude after the loss he made. And Tom Watson replied he would never let him go to competition after spending $10m on his training !
Why am I writing this ?
It highlights both the essence of management and the positive mind that drive outstanding people : the ability to analyze quickly, transparently, the ability to decide quickly, the ability to move forward and capitalize on experience.
No one can be expected to be the best 100% of the time whether people or countries. Only bad or jealous people spend time criticizing. Everyone know failures, whether small or big but most of all, the most important is what these persons do to capitalize on their experiences and change the present and the future. There is no space for shame and issues should be addressed openly with the right people to analyze the problems, design solutions and implement.
Definitely, being transparent and moving forward is a winning attitude.
Posted by Tristan de Ferluc, Abu Dhabi, UAE on Friday 1 May 2009 at 12:17 UAE time
I remember reading “In search of excellence” written by Tom Peters some 25 years ago. In this excellent book, he was telling us a short story about Tom Watson, a former MD or President of IBM who hired a brilliant young treasurer. This young gentleman lost $10m (a fortune at that time) and went to Tom Watson’s office to resign. As he was not in his office, he left his resignation letter on his desk. When Tom Watson came back and found the letter he walked to the gentleman’ office and asked him : what is it ? The young man answered it was his resignation letter as there was no other possible attitude after the loss he made. And Tom Watson replied he would never let him go to competition after spending $10m on his training !
Why am I writing this ?
It highlights both the essence of management and the positive mind that drive outstanding people : the ability to analyze quickly, transparently, the ability to decide quickly, the ability to move forward and capitalize on experience.
No one can be expected to be the best 100% of the time whether people or countries. Only bad or jealous people spend time criticizing. Everyone know failures, whether small or big but most of all, the most important is what these persons do to capitalize on their experiences and change the present and the future. There is no space for shame and issues should be addressed openly with the right people to analyze the problems, design solutions and implement.
Definitely, being transparent and moving forward is a winning attitude.
Its not the banks
Posted by Tariq, Dubai on Thursday 30 April 2009 at 00:45 UAE time
I disagree with the statement made above in this article made by Mr. Kanoo. Its a global economic slowdown and Dubai is the minute part of the whole situation. If Dubai economy gets better by any means it can never effect globally but if the global situation remains same then Dubai will get worse. US banks needs to pump in money in the US market where it starts recovering from where it started to go down and US president needs to bail out as much companies as possible to start the business. Unfortunately we are all dependant on the other markets
Posted by Tariq, Dubai on Thursday 30 April 2009 at 00:45 UAE time
I disagree with the statement made above in this article made by Mr. Kanoo. Its a global economic slowdown and Dubai is the minute part of the whole situation. If Dubai economy gets better by any means it can never effect globally but if the global situation remains same then Dubai will get worse. US banks needs to pump in money in the US market where it starts recovering from where it started to go down and US president needs to bail out as much companies as possible to start the business. Unfortunately we are all dependant on the other markets
BANK LENDING
Posted by RAMA, dubai, UAE on Wednesday 29 April 2009 at 18:19 UAE time
I AM WITH THE OPINION THAT UAE SHOULD AT LEAST HAVE FEW BANKS OWNED BY THE GOVERNMENT WITH SUBSIDISED LENDING RATES WITH A VIEW TO HELP ALL SECTORS OF ECONOMY GROW EQUALLY ON A REALISTIC BASIS. THIS IN TURN WOULD HELP CONSUMER PRICES CHEAPER AND A COMPETITION FOR OTHER BANKS WHO CHARGE EXORBITANT WITHOUT MERCY
Posted by RAMA, dubai, UAE on Wednesday 29 April 2009 at 18:19 UAE time
I AM WITH THE OPINION THAT UAE SHOULD AT LEAST HAVE FEW BANKS OWNED BY THE GOVERNMENT WITH SUBSIDISED LENDING RATES WITH A VIEW TO HELP ALL SECTORS OF ECONOMY GROW EQUALLY ON A REALISTIC BASIS. THIS IN TURN WOULD HELP CONSUMER PRICES CHEAPER AND A COMPETITION FOR OTHER BANKS WHO CHARGE EXORBITANT WITHOUT MERCY
declare any losses
Posted by vidiyala Rao, SHARJAH, U.A.E., United Arab Emirates on Wednesday 29 April 2009 at 17:47 UAE time
Mr.Mishal Kanoo, you are one of the true business leader, I fully support your view, but which banks do declare the bad debts, if they
declare what will happen the heavy bonuses the top management gets. practically the banks dont declare losses unless they bocome bankrupt.In this situation the business leaders like you should not remove any staff and should come up with some innovative business models.
Posted by vidiyala Rao, SHARJAH, U.A.E., United Arab Emirates on Wednesday 29 April 2009 at 17:47 UAE time
Mr.Mishal Kanoo, you are one of the true business leader, I fully support your view, but which banks do declare the bad debts, if they
declare what will happen the heavy bonuses the top management gets. practically the banks dont declare losses unless they bocome bankrupt.In this situation the business leaders like you should not remove any staff and should come up with some innovative business models.
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