'Mature banks made wrong assumptions'

NEW YORK: Prince Alwaleed bin Talal, the billionaire Saudi investor, said banks that loaned money to Dubai World can’t claim to be victims of the emirate’s debt crisis because they should have understood the risks. “These banks are very mature banks, and they have to differentiate between a corporate loan and a sovereign loan,” Alwaleed, 54, said in a TV interview.

Alwaleed said confusion over whether the Dubai government would back Dubai World’s debt “was not helpful at all” and damaged investor confidence in the region. “However, you have to understand that other countries such as Saudi Arabia, Qatar and neighbouring Abu Dhabi are countries to be reckoned with,” Alwaleed said. “With the price of oil where it is now, I don’t think their economies will be shaken at all.” Crude oil prices are up 76% this year to around $78 a barrel.

Alwaleed’s own company, Riyadh-based Kingdom Holding, has investments in the Gulf region, including banks and real estate in Saudi Arabia and Kuwait. He said Dubai’s woes don’t pose risks to his holdings or those of his partners. “Rest assured, Kingdom Holding is in very safe hands,” Alwaleed said in the interview. “It’s very conservative in its lending policies and our leverage ratio is very, very low.”