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Tue 28 Oct 2008 01:19 PM

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Gulf Bank chief quits after losses

UPDATE 2: Kuwait's second largest bank looking for capital increase or even merger after losses.

Kuwait's Gulf Bank is considering a capital increase or even a merger to shore up its business, the bank said on Tuesday, on the day its chairman resigned and two days after the central bank stepped in to support it following losses in trading currency derivatives.

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Bank, which has posted two straight quarterly profit declines, also said Chairman Bassam Al-Ghanim has resigned and been replaced by his brother Kutayba Al-Ghanim.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," the 61-year old Ghanim said.

He said Gulf Bank, which is only active in Kuwait, might increase its capital or seek support from its major shareholders.

And it might even consider a merger.

"I'm 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 region 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.

Meanwhile Finance Minister Mustafa Al-Shamali said on Tuesday the cabinet had approved a bill to guarantee deposits at all lenders as a result of Gulf Bank's troubles, but the plan still needs to be approved by parliament.

Gulf Bank shares have been suspended since Sunday pending an investigation by the central bank into the derivatives losses.

The cabinet has set up a committee led by Central Bank Governor Sheikh Salem Abdul-Aziz Al-Sabah to tackle the impact of the financial crisis on the world's seventh-largest oil exporter.

Sheikh Salem has said Gulf Bank depositors did not need to worry as the central was ready to provide the necessary liquidity. He confirmed on Tuesday that Gulf Bank had no more other derivatives deals outstanding. (Reuters)

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Joe Simm 11 years ago

When / if they reveal how much they've lost I'm sure it will be astounding.