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Prince Al-Waleed: Bank Regulation Is “Organized Confusion”

Prince Al-Waleed bin Talal spoke with FOX Business Network’s (FBN) Maria Bartiromo in a wide-ranging interview about regulation, real estate, Yahoo! Inc. (NASDAQ:YHOO) and oil production. Prince Al-Waleed bin Talal spoke about regulation saying, it’s “organized confusion” and that the United States is “overregulated in the financial industry.” When asked whether he would buy Yahoo!, he said, “No, thanks, I don’t buy Yahoo!” and that “the market is just putting a price tag that’s equal to its share, its share in Alibaba.” Prince Al-Waleed went on to talk about oil production in Saudi Arabia saying, “I don’t think that Saudi Arabia now is in a position to reduce its production, exactly like the position of United Arab Emirates and Kuwait” and the reason oil prices are falling is because of “a confluence of events, on the supply side, on the demand side.”

Prince Al-Waleed: Bank Regulation Is "Organized Confusion"

Prince Al-Waleed on regulation:

“I believe, frankly speaking, that the United States has — it’s overregulated in the financial industry.  I think we should have one regulator that clearly supervises everything, because right now you have seven regulators or six regulators.  Each one comes with his own opinion, his own recommendations, so it’s really, it’s like an organized confusion you have right now.  And you need to get stability in the banking industry.  Banks are doing better than before right now, and I think that you have to inject stability there by telling them exactly where are they heading, what’s needed from them.”

Prince Al-Waleed on whether he would buy Yahoo!:

“No, thanks, I don’t buy Yahoo!.  I respect Yahoo!.  I respect the lady CEO over there, but obviously I believe Yahoo! right now, the market is just putting a price tag that’s equal to its share, its share in Alibaba.  So, frankly speaking, I have no further comments on Alibaba, on Yahoo!, but really, the market is not putting a lot of credence into that company.”

Prince Al-Waleed on whether he has seen pullback in terms of real estate:

“No, no.  I saw actually in the hotel industry, the management part and the real estate part, we have seen no slowdown at all.  Actually we’ve seen some growth.  Actually, George V in Paris, the Savoy in London, the Plaza in New York, the San Francisco Fairmont, the Raffles in Singapore, what’s similar among them is they’re all showing growth…so, no, we’ve no slowdown at all, whatsoever, at all.  Actually, they’re picking up and doing better and they are a lot better than the big crisis era.”

Prince Al-Waleed on the whether the price of oil would be a catastrophe for the Saudi Arabia economy:

“Yes, and I reiterate again now…the minister of oil.  That same minister just a few months ago set at $100 the price of oil.  Everybody is happy, the consumers and the producers.  Well guess what now?  The price of oil now is $80; we hear nothing out of him.  Having said that, the price of oil at $80 is not news at all for Saudi Arabia.  Look, Saudi Arabia is 90 percent of its budget is based on oil.  And can you imagine a $20 collapse, which is 20 percent from $100, causes a major ripple effect in our budget for this year and next year.”

Prince Al-Waleed on the reason oil prices are falling:

“It’s a confluence of events, on the supply side, on the demand side.  Let me explain to you.  On the supply side, you’ve seen now the United States is increasing its oil production and gas production.  We’ve seen how other countries also are increasing their production.  Also fracking in the United States is going up.  Some of the countries also in Europe and Paris are beginning to get into the fracking business, also.   And also, in the Middle East, also, Iraq — with all that’s going on there, in southern part of it, also exports are still taking place….  So on the supply side we’re not seeing any drying up; actually we’re seeing an increase in supply.  On the demand side, we’ve seen how China as you’ve said that grew at 7.3 percent… Also, Japan also is sitting on the verge of recession.  But really what broke the camel’s back was really — is the revision of Germany’s growth from 2 percent to 1.3 percent.  This was really the final straw that broke the camel’s back whereby the market jitters increased and expectation of demand were, I believe, were diminished substantially.”

Prince Al-Waleed on what he would like to see happen from the Saudi standpoint right now:

“You know, Saudi Arabia’s position with the UAE, United Arab Emirates, and Kuwait, publicly went out and said that we will not reduce our production.  Because if we do reduce our production, some others will come and increase their production and they’ll lose market share.  So basically they’ll be having double hits by having less production with less price of oil…I don’t think that Saudi Arabia now is in a position to reduce its production, exactly like the position of United Arab Emirates and Kuwait.”

Prince Al-Waleed on whether he is expecting a decline in production in the coming months which would result in oil prices going back up:

“Well, I think there are a few choices.  Choice number one, they all meet together, the OPEC countries, and agree to reduce the production, whereby at least to maintain the existing price level or maybe to have it go up to a price acceptable to producers and consumers.”

Prince Al-Waleed on whether the markets are being rattled today:

“Well, you know, yesterday I was meeting with President Hollande the other day and we had the top leaders and seniors of the sovereign oil funds from North America, from Far East, from Australia, and from the Gulf Region.  And they all showed some warnings and concerns and jitters about the potential reduction of growth in China, Japan and now in Germany, because Germany, if it slows down, is going to affect the whole European arena.  And Mr – President Hollande was very adamant in his position, and alliance clear with many other leaders in the southern part of Europe, like Italy, Spain and Portugal, whereby they would like to get some additional stimulus into the European Union.  And this obviously is being faced with some tough rejection from Germany, but I think now with the reduction of growth, potential growth in Germany from 2 percent to 1.3 percent, I think Germany would begin to be more lenient in that front.  So growth is the name of the game.”

Prince Al-Waleed on the banks:

“Well, you know, Kingdom Holding is a mature company.  It’s a market cap of around $24 billion, $25 billion.  So that’s why we are mature and we act in mature manner.  So, we only invest in those companies I believe have growth like JD.com in China, like Twitter in the United States, and like many other project sin the Middle East.   As for Citigroup results.  We have seen, really, Citigroup this quarter shine, because if you compare them with the other big competitors like Bank of America, really, which was basically at the zero level flat, and J.P. Morgan, which missed, and Wells Fargo that met.  It was Citigroup only that beat the results.  So really, Citigroup under the leadership of Mr. Corbat have really saw some consistency and perseverance in the results and the results of this quarter proved very much that they’re on the right track under Corbat’s leadership.  And, by the way, I just met him in Riyadh just three days ago.”

Prince Al-Waleed on his shift into investing in technology companies:

“Well, sure, we were the first investors in Apple.  When we went to Apple, the price was $9.  And I remember Steve Jobs telling me, first telling me when I met him in California, saying that you are the only believer in our company.  And, yes, we do still have the stake in Apple. As for really moving to JD.com in China and Twitter in the United States, these are really high flying and star companies in their arenas.  And, yes, we are very focused in our plan investing in these companies.   And to tell you, frankly speaking, many companies come to us in this arena and just last two weeks we have declined maybe two or three companies because they were overvalued and we believe that their future is not as secure, as guaranteed as Twitter and as JD.com in China.  So we are very selective.”

Prince Al-Waleed on his reaction to the coalition between Saudi Arabia and the U.S. to destroy ISIS:

“The question is not is it going to work or not.  I think the world community no choice but not to only contain and degrade but to eradicate ISIS.  ISIS is a disease, is a danger, because these are people are sending us back to the dark ages, the middle ages.  And that cannot be accepted or tolerated at all. We’ve seen how men have been slaughtered.  We’ve seen how ladies have been enslaved.  We’ve seen how — I’ve seen youngsters being imprisoned.  This can’t continue.  And I believe eventually — thank god that Mr. Obama took leadership, and right now under the leadership of the United States, we have Saudi Arabia, United Arab Emirates, Qatar, Bahrain, and Jordan are all fighting right now.”

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