Financial markets will take a few more months to recover from the credit crisis but the global economy was likely to withstand the shock, Standard Chartered Bank's Mervyn Davies said on Wednesday.
It's going to take few more months for financial markets to get back to normal, Davies, chairman of the London-based bank, told reporters.
Emerging markets, particularly India and China, had grown impressively despite the turmoil in the United States and would contribute to global growth, said Davies, who is in India for a board meeting of the Asia-focused bank.
I am optimistic about the global economy, but the crisis in the financial markets is not over, he said.
The last few months have shown that the world is not totally dependent on the U.S. economy, he added.
Indian banks and financial firms have not been hit by the subprime woes and top banks such as State Bank of India and ICICI Bank have reported strong earnings, beating forecasts, while Indian shares have recorded handsome gains.
Davies said Standard Chartered was unscathed by the crisis, which was among the worst the markets had seen for decades. Writedowns in subprime-related investments have hit earnings of several banks and financial firms including UBS AG, Merrill Lynch, which ousted Chairman and Chief Executive Stan O'Neal after the world's biggest brokerage reported the biggest quarterly loss in its history.
This has been one of the most severe shocks in financial markets in the last 50 years ... It will take a few more months for all its implications to come out, Davies said.
Davies, who was the earlier the bank's chief executive and is also the chairman of the Business Council for Britain, a panel that advises the government on business issues, said the credit crisis highlighted the need for global regulatory changes.
What has happened has yet again proved that the regulators of the world have to get together and there has to be a new framework internationally for regulating that, he said.
He said banks operated globally, and the regulations should not be country-specific.
I think the G-7 and the big governments now have to get together and work out how do you control and regulate the banking industry because what you've got now doesn't work.
(Additional reporting by Rajkumar Ray)