Faced with the greatest financial crisis since the Great Depression eight decades ago, American money managers are increasingly looking towards the Middle East to sustain their businesses. They feel, and not without reason, that the region would be somewhat protected, though not necessarily immune, to the ravages of the present squeeze on the strength of its oil revenues.

John Thain, chairman and chief executive of Merrill Lynch & Co. Inc, propounded these views at the Dubai International Financial Centre. Thain said the region's sovereign wealth funds had tremendous opportunities to take advantage of the financial difficulties around the world.

With reserves boosted by record oil prices, Thain said these funds have an ''opportunity'' to take advantage of the difficulties in financial markets that have made assets cheap. Over ''multiple years'' these investments could become ''very attractive,'' he added.

Gulf Arab sovereign funds include the Abu Dhabi Investment Authority, considered the world's biggest with assets of about $875 billion, the Qatar Investment Authority and the Kuwait Investment Authority.

Thain observed that that no country could be totally decoupled from the global economy.

''The region, despite its oil wealth, is not immune to the crisis and will certainly undergo an economic slowdown. The question is the degree and the duration of this slowdown,'' he said.

However, he said there would soon be more lending activities between banks in the GCC as an unfreezing in the global financial markets gains momentum.

''Worldwide, we can see the beginning of unfreezing of liquidity between banks. You will start to see some access into the commercial paper market in the US so that the capital injection, plus the other pieces of the programme that the Fed and Treasury put together, will start to unfreeze the commercial paper market.'' Thain said he was optimistic about the long-term economic outlook of the Middle East region.

Oil revenues will continue to provide a degree of protection to Gulf states. ''Our plans to open up offices in Kuwait and Qatar and expand our wealth management business are based on this optimism,'' he said. The two offices will be operational by the end of this year.

''In spite of all the financial difficulties and concern about the global economy we continue to be optimistic about our presence in the Gulf and we are certainly committed to continue to grow our presence here,'' Thain said.

India also found a mention in his speech when he remarked, ''We have consistently said, we see opportunities in Brazil, Russia, India, China and the Middle East.''

Merrill Lynch said in a report earlier this month it had lowered growth forecasts for the UAE, Saudi Arabia, Qatar and Kuwait and that GDP growth for the region as a whole was expected to slow to 4.5 per cent in 2009 from 6.2 per cent this year.

Merrill Lynch, which is being taken over by Bank of America Corp (See: Bank of America buys Merrill Lynch), reported a fifth straight quarterly loss as the credit crisis left the firm with at least $13.5 billion of write-downs (See: Merrill Lynch plans job cut at First Franklin Financial Corporation). He said the takeover procedures would be completed by December. He said he expected ''thousands'' of job losses from the bank's $50 billion takeover. Most of the cuts will fall in information technology, operations and finance.

He said there would be more consolidation in the US banking sector. ''There is a need to recapitalise small and medium banks. Equally important is better and efficient banking regulations. He said the actions by the Fed and authorities across the globe in recent weeks would start to unblock and unfreeze the credit markets.

Global investment banks including Goldman Sachs Group Inc. and Morgan Stanley have expanded their Middle East offices in the past three years to tap into rising wealth and rapid economic growth. Merrill's main business in the region is wealth management although it has expanded its investment banking unit and was one of four managers of port operator DP World Ltd.'s record initial share sale in November.

Merrill Lynch recently added five new financial advisers to its wealth management unit in Riyadh, Saudi Arabia, and expects to begin operations in Qatar and Kuwait before the end of the year, Fares D Noujaim, Merrill's president for the Middle East and North Africa, told the conference.