Bank boss blasts UK’s ‘Zimbabwe’ economics

By Ian Fraser

Published: The Sunday Times

Date: April 26th, 2009

Azeem Ibrahim argues against the government’s nationalisation of banks

A Glasgow-based banking and insurance entrepreneur has said the British government’s “Zimbabwe-style” approach to fighting recession will lead to years of poor economic performance.

Azeem Ibrahim, the chief executive of United Arab Emirates-based ECM Bank and related companies, argued the government’s policy of nationalising banks is flawed. “It would have been better to create a single toxic bank to take over all these toxic assets,” he said. “That would have wiped the slate clean and enabled the UK to move on with a clean banking system.”

Ibrahim, 33, whose worth has been estimated at about £60m, said the policy of boosting liquidity through quantitative easing is badly flawed. “That doesn’t make sense,” he said. “To me, that is just the same as a Zimbabwe-style running of the printing presses.”

Ibrahim said that while the banking and financial crisis is unprecedented in scale, the solutions adopted by Labour have been tried elsewhere — and they have failed.

“Nationalisation of the banks was tried by President François Mitterrand in France in the early 1980s and it didn’t work. Quantitative easing was tried by Japan over the course of a decade and it didn’t work either,” he said.

Ibrahim warned that the lack of “irritating shareholders” at nationalised banks would mean they become lazy and inefficient. He is also concerned that nationalised banks will come under political pressure, which would distort their behaviour. For example, he said an MP in a marginal seat might pressurise them to limit home repossessions or corporate administrations in his or her constituency. “Nationalisation opens them up to political interference,” he said. “It also stifles competition.”

Ibrahim set up an online insurance company selling international maritime, transport and logistics insurance in 2004 and he also owns European Commerce and Mercantile (ECM) Bank.

He was brought up in a council house in Anderston and was featured in The Sunday Times Scots Rich List in 2007.

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Posted by Ian Fraser on Apr 26 2009. Filed under Article Library, Latest Articles. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry