FULL DEPOSITS GUARANTEE WILL FURTHER BOLSTER CONFIDENCE, SAYS BANKER

By M. Saraswathi + Nor Baizura Basri

KUALA LUMPUR, Oct 17 (Bernama) -- The government's move to fully guarantee
all deposits in banks and financial institutions is not really needed in
Malaysia given its strong financial system but will nevertheless further bolster
confidence in the country, CIMB Group chief executive officer Nazir Razak said
Friday.

He said the guarantee announced by the Finance Ministry and Bank Negara
"was
in response to what the neighbouring countries did as the situation in
Malaysia's financial sector does not warrant it."

"However, in not doing so may result in funds outflow," he told Bernama
when asked on the decision to provide a blanket guarantee on bank deposits
until December 2010 on the sidelines of the Regional Eisenhower Fellowships
Conference.

"I certainly don't think Malaysia on its own has any need to introduce this
but because Singapore and other neighbouring countries are introducing it, Bank
Negara really had too (as) the danger (of not doing it) was to have an Ireland
and U.K. situation," he said.

Some European governments pumped in billions of Euro to support their
financial system adversely affected by the U.S. subprime credit crisis and in
the process severely dented faith in their banking systems.

Nazir said: "there is a high level of confidence in the country's banking
system. Malaysia is relatively strong."

Nevertheless, he said, the move certainly showed Malaysia's Central Bank
was very much on top of the financial situation.

AirAsia chief executive Officer Datuk Seri Tony Fernandes lauded the
government's move, saying local banks were nevertheless in a good
position.

"I wasn't in any fear. I think obviously we are in the region of
rumour-mongering countries. So it is good to put that up to boost confidence and
allay fears.

"There was never a fear that any bank in Malaysia would be going down
following the U.S. financial turmoil.

"Actually, what the Americans should have done was to hire a few of our
guys and from Indonesia and they probably should be able to fix it (U.S.
financial banking problems) faster as we did in 1997," he said in
tongue-in-cheek as both countries, especially Kuala Lumpur, managed to come out
of the 1997/98 financial crisis in their own way without the advice of the
International Monetary Fund or the World Bank.

At that time, western financial experts chastised Malaysia for imposing
tough regulations, capital controls and bailing out local companies in efforts
to insulate the economy and for it to recover.

Now, the U.S. government is doing the very same thing, bailing out large
financial institutions in efforts to avert the financial crisis from
deteriorating further.

Tony said: "I think there should be more sensible decisions (in global
finance). The world has been driven not by fundamental values but rather mere
speculation.

"So, I hope the world financial system will change and go back to real
value
and not just paper trading. I hope the best to come out from this is integration
within Asean," he added.
-- BERNAMA