Global Investment House posts FY loss

TROUBLED TIMES: Global Investment House is billed as Kuwait's biggest investment bank. (Getty Images)

Troubled Kuwaiti investment bank Global Investment House said it plans to focus on its fee generating businesses as it swung to a full year loss.

The company posted a net loss of KD257.6m ($885.2m) in the year ended December 31 2008, compared with a profit of KD91.4m ($314m), after making impairment charges of KD297.4m ($1bn).

Global, Kuwait's biggest investment bank, posted a AED360.5m ($1.36bn) loss in the fourth-quarter alone - mainly due to impairment charges for investments and loans.

The figure compares to fourth-quarter profit of KD29.47m in the same period in 2007, according to Reuters data.

The troubled bank was barred from trading on the Kuwait stock exchange earlier this month after failing to publish its year end results on time.

It defaulted on the repayment of a syndicated facility in December 2008 and has appointed HSBC Bank to renegotiate loans owed to foreign banks.

“This has been caused, in a large part, by unrealised losses on our investments and as a result we are renewing our focus on fee generated income, which has always been profitable and in which we demonstrated continued growth in 2008,” said Maha Al Ghunaim, chairperson and managing director.

The company said that the assets of the principal investments business will be realised “in a orderly fashion” over the medium term, with the proceeds primarily going towards repaying debt obligations.

The division undertakes investments on Global's own account in the MENA region and, to a limited extent, in other emerging markets such as India, Pakistan, Turkey and Malaysia.

Global has not yet agreed on the terms for restructuring its debt obligations, but Al Ghunaim said she was convinced that the company is “up to the challenge”.

“We are aware of our need to honour our obligations to all of our stakeholders going forward and we have taken immediate steps to place Global in the best possible position to deliver value in these turbulent markets. I am pleased that we are making good progress on a number of these fronts,” she said.

Global said that a long term financing solution for the company was likely to be achieved within the coming months

The company has reduced costs by as much as 20 percent after it cut its workforce by 10 percent, scaled back salaries and cancelled all bonus payments.

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