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Mon 2 Nov 2009 07:21 AM

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Saudi Arabia calls for strict banking regulations

Finance chief also says conservative lending regime needed prior to G20 regulation debate.

Saudi Arabia has called for strict banking regulation and conservative lending regimes but spoke out against the need for a global financial supervisor, five days ahead of a G20 meeting where regulation will take centre stage.

The G20 member said it wished to strengthen regulatory institutions vis a vis banks, and that it was working actively ahead of the Scotland meeting of central bankers and finance ministers to make its views heard.

"We need to promote regulatory frameworks and conservative policies giving the regulators and not the institutions the last word," Governor of the Saudi Arabian Monetary Agency Muhammad al-Jasser said at a financial conference on Sunday.

Western G20 states as well have advocated a crackdown on banker pay and regulation in the wake of the financial crisis. Saudi Arabia itself has suffered severe consequences from the crisis.

Gulf regulators and central bankers are grappling with a multi-billion dollar debt restructuring at two large Saudi family businesses, Saad Group and Ahmad Hamad Algosaibi and Brothers, seen as the biggest blow to hit the Middle East since the start of the crisis.

Jasser said, however, that a single, over-arching super-regulator would do more harm than good and that countries needed to enact countercyclical policies that would dampen the highs and cushion the lows of economic swings.

"If there was a super-regulator where they attempted to impose specific policies, they would have asked us like in the UK to have soft-touch regulation, telling us that supervision does not need conservative measures or policies."

"Saudi Arabia is trying to reflect the fears and concerns of the developing countries, namely the Arab and Gulf countries," he said, saying that the sovereignty of each state needed to be respected.

"We are undertaking a very active role and expressing those fears and concerns on your behalf ahead of the G20," he told a conference of Arab bankers and central bankers. (Reuters)

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