If Wall Street is hoping that Prince Alwaleed bin Talal will ride to the rescue of America's crumbling banks, here's the word from the Saudi billionaire: Thanks, but no thanks. Having bailed out Citicorp on a couple of occasions — most recently by helping in its recapitalization earlier this year — Al-Waleed says he's not in the market for any more U.S. financial sector assets.
I spoke with Alwaleed in Riyadh on Tuesday, as the world reeled from the shock of the Lehman Bros. bankruptcy. In his offices on the 66th floor of the iconic Kingdom Tower, the prince (a nephew of King Abdullah) seems a world away from the tumult in New York City. But a giant TV screen in his office was tuned to CNBC, and he conceded that his personal worth may have taken a hit with the stocks slide, though he stressed that he was doing well with investments closer to home.
Excerpts from the interview:
TIME: Did you see this coming?
Alwaleed: I'm not sure anyone at all saw the depth and magnitude of the problems faced by some financial companies in the U.S. I will quote [Alan] Greenspan in saying that this is a once-in-a-lifetime, or once-in-a-century event. It shows the gravity of the problem over there.
TIME: You were involved with Citi's recapitalization earlier this year. Considering everything that's happened since then, any regrets?
Alwaleed: No. You have to understand that our involvement in the recapitalization of Citi is a long-term thing. It's not a one-, two-, three-year plan. In January 1991, I was the only investor in Citigroup at that time, with around $600 million. The next year, things didn't go well, but over the next decade, things really boomed dramatically. You have to look at the investment in Citi as a long-term thing.
But clearly, the financial sector in the U.S. is facing a huge crisis. When you have two big companies like Bear Stearns and Lehman vanish, and Merrill Lynch being absorbed, that tells you a lot about the difficulties being faced by the financial sector in the U.S.
TIME: Is this the bottom?
Alwaleed: I'm not sure it's the bottom yet. We're trying to get to the bottom. But every time someone says we're at the bottom, things get a bit worse.
TIME: Would you buy now?
Alwaleed: No, I think we have enough involvement, with Citibank, in the financial services arena.
TIME: No more banks for you, then?
Alwaleed: No, I'm involved with Citibank. Legally I can't go beyond 5%. Right now, we're at 4.9%, and I think that's enough.
TIME: More recently your interest seems to have moved away from the U.S.
Alwaleed: We have a big exposure to the world economy in general — in banking, hotels, in real estate. But right now, there's a lot of emphasis on Saudi Arabia. Saudi Arabia is experiencing a big boom. There's a lot of emphasis on real estate, and on companies in Saudi Arabia.
TIME: What do you expect will be the knock-on effect on Saudi Arabia of the banking crisis and the overall economic downturn in the U.S.?
Alwaleed: The world's now a very connected place, so things like the cost of funds, the scarcity of debt — these will impact some of our projects in Saudi Arabia. There's nothing called immunity: you can't be immune to what's happening around the world. But I would say we're less impacted directly than countries in the vicinity of the U.S.
We have a lot of tail winds here, remember — the price of oil, and an economy that's on very solid ground. These can help to mitigate some of the issues that we may be having from the impact of the real-estate collapse in the U.S.
TIME: How has your personal net worth, your personal fortune been affected by the way the stock markets have performed in the past six months?
Alwaleed: No doubt, we were impacted like anybody else. Most of my wealth is in Kingdom Holding, but I have outside assets that are not being publicly traded. Like my regional [Arabic] media companies, Rotana and LBC. And I have a lot of personal real estate outside Kingdom Holding. All in all, we're withstanding it well.
6 months ago