Gulf Bank CEO eyes start of recovery in 2010

The CEO of Kuwait's Gulf Bank said on Monday that it will be 2010 before the bank begins "to restore its pre-crisis position" as one of the Gulf state's largest banks.

Michel Accad added that the bank's exposure to Saudi Arabian conglomerates Saad and Algosaibi could be contained and dealt with.

"We are in continuous dialogue with the officials in both groups and the concerned supervisory parties in both countries to discuss how to deal with this issue," he said in comments published by KUNA News Agency. "But we must confirm we are in a better situation that allows us to contain the losses especially after (our) capital hike."

In response to a question about the size of exposure to both groups, Accad said, "The problem is not unique to Gulf Bank, as many banks are facing the same problem. Realistically, we should take stricter actions against those borrowers to preserve our rights. Such exposures will not affect our capital adequacy. Although constituting a problem of this magnitude, it will eventually be absorbed."

He said action taken following the ban k's huge losses in 2008 had put it in a "much stronger position".

"As everyone knows, last October the Bank went through a serious crisis that cost the bank substantial losses...Of the major actions adopted by the bank was a capital increase, in addition to setting aside a large portion of the Bank's operating profit, during the first half of the current year, as future precautionary provisions. Therefore, we are now in a much stronger position following those events," he added.

He admitted that 2009 would be a "difficult year" for Gulf Bank, adding that it would carry out reforms on its credit policy next year.

"The entire world has changed in the aftermath of the crisis. Gulf Bank changed its board of directors and executive management, with new names joining the Bank. Hence, everyone hopes that 2010 will represent a starting point by focusing on retail and corporate banking," the CEO said.

Regarding possible regional expansion, Accad added: "If we manage to fully recover during 2010-2011, this will reflect a healthy step. Then, we will naturally proceed abroad in the right direction. However, we have to take it step by step, as we should solve our problems before we consider expanding."

Gulf Bank was rescued by the central bank in 2008 after derivatives losses. Its troubles had prompted the government to guarantee all deposits in local banks to restore confidence.

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