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Sat 21 Mar 2009 03:13 PM

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Kuwait's Gulf Bank posts $1.54bn losses for Q4 2008

Fourth-largest bank suffers full-year net loss for 2008, against net profits, 2007.  

Kuwait's troubled Gulf Bank on Saturday posted a fourth-quarter loss of KD445.5m ($1.54bn), citing losses on derivatives transactions as it was hit by the global financial crisis.Kuwait's fourth-largest bank by market value said it made a full-year net loss of KD359.5m, compared with a net profit of KD130.44m the previous year.

Gulf Bank did not provide quarterly data, which Reuters calculated from nine-month financial statements showing a profit of KD86m in the first nine months of 2008.

In 2007, the bank made a fourth-quarter net profit of KD25.35m.

The result was "mainly due to exceptional losses in derivative transactions, but also from losses on its investment and loan portfolios relating to the global financial meltdown", the bank said in a statement.

In December, Gulf Bank shareholders approved a rescue plan ordered by the central bank to raise 375 million dinars in an emergency rights issue to cover derivatives losses of the same amount.

In the following month, the Kuwait Investment Authority (KIA), the country's sovereign wealth fund, bought the remaining unsubscribed stock, taking a 16 percent stake in Gulf Bank.

"(The year) 2008 proved to be a difficult and disappointing year for Gulf Bank due to the exceptional losses incurred in its derivatives operation," chairman Kutayba Al Ghanim said in the statement.

Ghanim warned of yet another tough year in 2009 as the global financial crisis takes its toll on the wealthy Gulf Arab state. "Gulf Bank is not immune ... though the bank is in a sounder position due to the recent recapitalisation and additional provisions taken in 2008," he said.

He did not elaborate further on the provisions.

Banks in Kuwait and in other Gulf Arab countries have seen sharp profit declines as the credit crisis hit the oil-exporting region, with some posting quarterly and annual losses and being forced to take provisions.

In 2007, the bank made a fourth-quarter net profit of KD25.35m and an annual net profit of KD130.44m.

In October, the central bank halted trading in Gulf Bank until the end of a restructuring plan that saw chairman Bassam Al Ghanim replaced by his brother Kutayba.

The lender said in November that its board of directors would resign after finalising the capital increase and that a new board would be elected, but has given no further details since.

"Improvements that will result from restructuring within the bank will take time," Ghanim said, without elaborating.

Last year, the government guaranteed all deposits in Kuwaiti banks in a bid to restore confidence after Gulf Bank's difficulties raised investor fears that the sector's problems as a result of the credit crisis ran deeper than first thought.

(Reporting by ; Editing by David Stamp)

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