Kuwait financial sector 'nearly stable'

Central bank governor says too early to tell whether it has totally overcome impact of global crisis.
Kuwait financial sector 'nearly stable'
By Eman Goma
Sat 09 May 2009 08:09 PM

Kuwait's financial sector is more stable than in the fourth quarter but it is too early to say whether it has totally overcome the impact of the global crisis, the Gulf Arab state's central bank governor has said.In October, Kuwait had to step in to save Gulf Bank, the only major bank in the Gulf Arab region requiring a government bailout. Meanwhile several major investment firms are struggling to get new loans.

Latest data on liquidity levels and earnings released by local banks are among indicators showing that the global financial crisis is now biting less, Sheikh Salem Abdul-Aziz al-Sabah told al-Rai newspaper in an interview.

"It might be premature at the current time to assert that the local banking and financial sectors have totally overcame the aftermath... of the global financial and economic crisis," he told Rai according to a transcript of the interview obtained ahead of publication on Sunday.

"Despite that, I can say that the situation of the banking and financial sectors might be currently closer to stability than... at the start of the fourth quarter of last year."

In March, Kuwait's cabinet approved a $5.2 billion economic stimulus package to enable banks to lend about 4 billion dinars within two years of which the government would guarantee up to 50 percent to encourage lending.

"We are now in a much better position... the financial stability law and its tools gave us more relief and comfort," Sheikh Salem told the paper.

"I confirm that for the time being I am more comfortable compared with the fourth quarter of last year."

No investment firm has applied to benefit from the package yet, he added.

"Some important local investment firms are still facing tough challenges to restructure...," Sheikh Salem said, without elaborating.

Global Investment House, the country's biggest investment bank, has defaulted on most of its debt.

And Investment Dar, Kuwait's biggest investment firm complying with Islamic law, has said it is in talks with creditors for a revamp and may sell assets. (Reuters)

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