Feb. 22, 2016


Dr. Hamad Al-Hasawi

Kuwait

Dr. Hamad Al-Hasawi

Secretary General, Kuwait Banking Association (KBA)

BIO

Dr. Hamad Al-Hasawi served as head of financial services at Rasameel Structured Finance during 2003-11, and has held positions such as commercialization and marketing consultant at the Kuwait Institute for Scientific Research, Chief Operating Officer at Gulf Holding Company in Bahrain, and Senior Vice President at KIPCO Asset Management. Before that, he was Vice President at Gulf Investment Corporation and adviser to the Ministry of Defense. In addition, he has held the position of Visiting Professor to the American University of Kuwait and the Australian Collage of Kuwait (ACK). He earned a PhD in Management and Organization from the University of Stirling, UK, and received an MSc in Civil and Environmental Engineering from the Kuwait University, and a BSc in Chemical Engineering from the University of Dayton, US.

One of KBA's goals is to boost cooperation among local banks. What does the organization do to achieve synergy among banks in the country?

At present, all banks are members of the KBA. By default, any newly established bank or branch of a foreign bank opens in Kuwait will become a member. To ensure the effective cooperation of banks in discussing and following up issues of interest, KBA has a number of specialized committees in all areas of concern, and all banks are members of these committees. These committees are to meet regularly to address pressing issues and suggest appropriate ways to deal with them. This system has proved to be effective in enhancing cooperation among members of KBA.

Global interest in Kuwait continues to rise, driven by the strong performance of Kuwait's banks in recent years. What have been some of the key, recent developments in Kuwait's banking sector, in terms of policy, that have improved the operating environment?

The CBK has continued to strengthen regulation and supervision of the banking system to safeguard financial stability. The CBK operates a strict system of monitoring to ensure the viability of banks and shield the banking sector from undesirable shocks. By applying macro-prudential tools, the CBK is proactively monitoring and mitigating banking sector risks. By approving the implementation of the instructions of Basel III capital adequacy standards in June 2014, the leverage ratio standard in October 2014, and instructions on liquidity coverage ratio in December 2014, the CBK completed the implementation of the financial standards of the Basel III reform package. Kuwait has become one of the leading countries to implement these standards, adopted in the aftermath of the global financial crisis in order to consolidate the pillars of financial stability. The Kuwaiti banking sector has a capital adequacy ratio of 16.9% according to the Basel III definition. Continued efforts to develop money and debt markets will further strengthen liquidity management and improve monetary transmission.

What are some common issues that banks are currently facing in Kuwait, and how is the KBA working to address these issues?

The main issue currently facing banks is the full application of Basil III. KBA is coordinating with banks with the assistance of the CBK to fulfill their obligations according to Basil III by 2018. Kuwait is currently developing the SME sector. As a promising sector for attracting young entrepreneurs and providing jobs for Kuwaiti new comers to the labor market, KBA is coordinating between banks and the National Fund for developing SMEs for effective involvement of banks in co-financing SMEs with the National Fund. Funding agreements have already been signed between the National Fund and some national banks.

Kuwait's economy is facing new challenges with the recent drastic drop in oil prices. What are the main challenges and opportunities at this crucial point in the country's development?

There is no doubt that the most important challenge facing Kuwait now is the recent drop in oil prices. For the first time since the 1999/2000 fiscal year, the state budget scores a deficit estimated to be KWD8.2 billion (approximately $28 billion). Current scenarios also indicate that oil prices will continue to be low at least for the medium term in the future. Surely, the declining oil prices are expected to have negative effects on the private sector in Kuwait. This is because public spending is the main driver of economic activity in the state. The decline in public spending is expected to cause lower rates of economic growth, which has already been expected by international economic institutions like the IMF and the World Bank. From that perspective, we expect the growth of banking services to decline.

What are your expectations for the banking sector in 2016?

Economic conditions in 2016 will be to some extent different from those that prevailed in 2015. We expect oil prices to continue to be lower than their trend. Lower oil prices will also mean lower per capita income and private savings. Of course, all of these factors will have a negative impact on the banking sector. This will be countered by opening the door for banks to provide necessary credit for the government to finance the budget deficit.

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