Sunday, 26 October 2008

Gulf Bank suspended

The Kuwait Central Bank stepped in to rescue the country's second largest lender. The bank had incurred significant losses from trading in derivatives and its shares were suspended on Saturday. A Central Bank order said trading in Gulf Bank shares is suspended pending an investigation into the derivatives deals that caused the losses.

The Central Bank and Gulf Bank say the measures were merely preventive and were misinterpreted. Despite the government guarantee, hundreds of depositors led a run on the bank.

The bank's losses are estimated at up to KD 200 million ($749 million). Derivatives customers were unwilling or unable to fulfill their obligations to cover their losses.

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