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Kuwait guarantees deposits
Arab News — JEDDAH: Kuwait moved to prop up one of its banks yesterday as the global financial crisis spread to the Gulf, sending stocks into a tailspin.
The Kuwaiti central bank was forced to step in to support Gulf Bank, which was hit by losses from trading in currency derivatives after the dollar rose, prompting the government to announce it would guarantee local bank deposits.
Gulf Bank, Kuwait’s fifth-largest bank by market value, had suffered two straight quarters of falling profit due to bad debt and the impact of weak markets on its investment portfolio.
Yesterday, the central bank halted trading in Gulf Bank’s shares and appointed a supervisor to oversee its treasury, foreign exchange and financial markets trading operations. The central bank said trading in Gulf Bank stocks would remain suspended until the probe was completed.
Gulf Bank ran into trouble after some of its clients refused to cover their losses from currency derivatives trades, leaving the bank to foot the costs until a deal was reached.
Chief Executive of the National Bank of Kuwait, the country’s biggest bank by assets, Ibrahim Dabdoub put the losses at 150 million to 200 million dinars, but Gulf Bank General Manager Fawzy Al-Thunayan dismissed the comments as too early.
“We don’t know yet. Dabdoub can say what he wants,” Al-Thunayan said, speaking in front of the bank’s headquarters where a crowd gathered, adding that deposits were safe. He said the full extent of losses would not be known until today, when the bank closes its currency positions abroad.
Kuwaiti traders staged another walkout yesterday and protested outside the stock market. The traders, who deserted the stock market on Thursday, the business week’s final day, left the trading chamber again after the index dived more than 300 points a few minutes after the opening. |