Sub-Prime Will Take 1-2 Years To Sort Out: Wee

Source : The Business Times, July 8, 2008

UOB head calls it the worst crisis he has seen in 48 years

FOR those caught up in the sub-prime crisis, the light at the end of the tunnel is going to take one to two years to emerge, according to United Overseas Bank (UOB) chairman Wee Cho Yaw.

Mr Wee: Received an Honorary Doctor of Letters degree from NUS yesterday for his accomplishments

Mr Wee spoke at the start of the National University of Singapore (NUS) Commencement 2008 yesterday, during which he received an Honorary Doctor of Letters degree from the university.

The honorary title was conferred in recognition of his accomplishments in the banking, education and community leadership areas.

Mr Wee had strong words about the current financial crisis and the myopic nature of the players in the financial industry.

'During these past 48 years, I have seen many economic crises, but I believe that this current financial crisis is the worst I have encountered.

'As I see it, the crux of the problem lies in the transformation of the financial industry and a corporate culture that encourages financial players to focus on short-term gain.

'I am very concerned about the current situation. I hope I am wrong, but my view is that this crisis will take one to two years to stabilise,' he said.

Mr Wee also pointed out the ambiguous extent of the fallout from exotic lending instruments.

'According to media reports, financial institutions have written down close to US$400 billion so far. But this is what frightens me most - no one can tell me how much more will be written off because no one really knows the size of the collaterised debt obligations (CDO) market before its collapse,' he said.

According to him, a tighter rein is needed to ensure recovery.

'The liquidity crunch can only be resolved by concerted efforts of the world's major central banks.

'Regulators around the world will also need to take steps to ensure close supervision of financial institutions and the exotic trades that have sprung up over the past decade,' he said.

Yesterday was the first of a series of commencement ceremonies being held for NUS's graduating class of 2008, which will continue until July 15.

It was presided over by the university's chancellor, President S R Nathan, and the commencement address was given by Professor Shih Choon Fong, the president of NUS.

Also present was Dr Ng Eng Hen, Minister for Education.