Fitch downgrades rating for troubled Gulf Bank

AUDIT REPORT: Gulf Bank chiefs say external auditors are assessing losses from a recent derivatives deal. (Getty Images)

Ratings agency Fitch downgraded Kuwait's Gulf Bank after the Gulf Arab state had to rescue its fifth-largest lender by market value because it was hit by derivatives losses.

Fitch cut the bank's rating to "F" from "D" as it would have defaulted had it not received emergency support, the agency said in a statement late on Thursday.

Gulf Bank "requires additional capital from existing shareholders and/or external sources to cover these losses and maintain capitalisation at adequate levels," the statement said.

The Gulf Bank's long-term Issuer Default Rating (IDR) is unchanged at "A+", with a stable outlook, the agency said.

Gulf Bank said on Thursday external auditors were studying the extent of its losses.

The bank has said it is considering all options, including a capital increase. Kuwaiti Finance Minister Mustapha al-Shamali said in October the government was ready to invest in the capital hike if the bank's shareholders failed to secure the funds. (Reuters)

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