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Saturday, 17 January 2009

Saving the banks

This week, banks ran into yet deeper crisis: the sector is in more trouble than was feared. As Ben Bernanke, chairman of the US Federal Reserve, noted in a speech in London this week, however, economic recovery will not begin until the financial sector recovers its health. Governments must act.

In October, following a British lead, governments around the world recapitalised their banks. This drastic measure saved the sector from collapse. But, as the events of this week have demonstrated, the banks are still on the ropes.

Bank of America required $20bn of capital and guarantees from the US taxpayer and Anglo Irish Bank was nationalised to halt a run by depositors. Deutsche Bank, meanwhile, revealed striking fourth-quarter losses. Banks are not lending, but are hoarding capital in readiness to absorb losses from existing bad loans and securities.

Pakistan stocks at four-year low led by Oil&Gas

Karachi: Pakistan's stocks fell to a four-year low, led by Oil & Gas Development Co, on concern foreign investors may accelerate the sale of shares that started since the country lifted its trading curb a month ago.

The Karachi 100 Index lost 266.65, or 4.6 per cent, to 5,511.93 at the 4pm local-time close, its third straight day of declines. The retreat added to its 10.2 per cent drop for the week.

"There is speculation that overseas investors will sell more shares worth $150 million," said Syed Suleman Akhtar, head of research at Foundation Securities in Karachi. "Foreign investors have been selling Pakistani stocks in the past 30 days, hurting the sentiment of local investors."

Dubai's refinancing needs to touch $15b

Dubai: Dubai's corporate refinancing requirements in 2009 are expected to touch $15 billion (Dh55 billion), according to credit rating agency Moody's in its latest report.

This is nearly half of the total refinancing requirements of the Gulf Cooperation Council (GCC), estimated at $33 billion (Dh121 billion). The UAE's total refinancing requirements are put at approximately $19 billion (Dh70 billion).

Dubai companies in which the government has a stake, such as Dubai Holding, are included in Moody's estimate of the figures, and the report states that “addressing these maturities will be a significant challenge, although we do expect liquidity to return to the markets as 2009 progresses”.