Kuwait Bank will buy equity in Gulf Bank

Kuwait Government agreed to buy an equity stake in Gulf Bank, the country’s second-largest lender by assets, after the bank announced unspecified losses from derivative trading last week, Kuwait news agency Kuna reported, citing Finance Minister Mustafa Al Shimali. The government, which already guaranteed customers’ deposits with the bank, will “contribute to the bank’s capital” if shareholders don’t fully provide necessary cover, the public sector news agency quoted Al Shimali as saying late yesterday. The measure is aimed at supporting the financial position of the bank and maintain its credit rating, Al Shimali said. Gulf Bank is considering a capital increase or even a merger to shore up its business. The central bank has appointed a treasury supervisor for Kuwait’s fifth-largest bank by market value and guaranteed deposits, as the global financial turmoil spilled over into the oil exporting region. Gulf Bank, which has posted two straight quarterly profit declines, also said Chairman Bassam Al Ghanim has resigned and been replaced by his brother Kutayba Al Ghanim. The new chairman declined to say how much the bank had lost from the euro derivatives deals, but told reporters it had stopped all such dealings. “The bank plans to continue [business] as normal… we have more liquidity than we need… to cover everybody without the central bank’s guarantees,” he said. He said Gulf Bank, which is active only in Kuwait, might increase its capital or seek support from its major shareholders. Ghanim said Gulf Bank might even consider a merger. “I am willing to look at every offer and every possibility that would make the banking system stronger in Kuwait,” Ghanim said, adding that there were no current talks. Asked whether a merger with local market leader National Bank of Kuwait (NBK) was possible, he said: “If NBK wants to merge with us, that’s news to me. But it’s good news. I would not reject that.” Banks across the Gulf have been hit by the global credit crunch, hampering their ability to finance multi-billion-dollar infrastructure and industry projects launched during the oil-fuelled economic boom. Gulf Bank said board member Abdul-Kareem Al Saeed had also resigned. Kuwait’s parliament yesterday voted in favour of a law guaranteeing bank deposits in all local and foreign banks operating in the emirate. Lawmakers voted 50 to seven in favour of the law, which will guarantee the approximately 23 billion dinars (Dh315.6bn) of deposits, said Mohammed Al Saqer, a member of Kuwait’s elected assembly. Agencies

Par La Rando MIDDLE EAST