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Kuwait

Gulf Bank customers don’t panic

I’ve heard from a number of people that a lot of Gulf Bank customers are trying to withdraw all their money from the bank in fears of losing it. The central bank already stepped in since morning and said it would guarantee the bank which means if you have your money with Gulf Bank its safe. DON’T PANIC and don’t spread rumors. Gulf Bank is not bankrupt, people are not going to lose their money and the bank won’t be closing down.

41 replies on “Gulf Bank customers don’t panic”

Around 3 million Kuwaiti dinar has been withdrawn since 9:30AM today
i believe people will do the same with the evening shift.

Why that guy from the management took that time to make the statement !

they are not professional enough !

We have to be very careful. Things don’t look so good! Remember what happened to some of the foreign banks? Everything looked fine at the beginning but then they went bankrupt. What I am trying to say is that central bank can’t always help the banks!

people withdrawing money out at this time , would create more problems than actually solving it .. if CBK ends up pumping too money at this stage .. inflation will blow out of proportion

Cheers Mark – thanks for that post. No one is going bankrupt, they’ve just lost some money (and even that isn’t for sure)!

@Buzberry, Gulf Bank isn’t the size of Citibank, its chump change compared to the kind of cash the CB or Min. Finance has access to. According to the 2007 balance sheet, Gulf Bank have KD 3 Billion in deposits –
For a comparison, the KIA spent KD 500 Mil in just 4 days playing around in our stock exchange…. Kuwait’s banks are tiny compared to the government. They bailed out ALL the banks anyway after the invasion and after the manakh problem…

toni, if its a guarantee then its a different story .. but when people demand their money back… the guarantee becomes a reality, since the banks cant afford.

about the posts … how many of the visitors might have withdrawn their funds after reading “few” negative points here…

secondly .. Gulf Bank .. must have an open statement on the situation, rather than pushing their customers to listen to rumors , blogs , or international press releases….

What a honk of utter shit.

Guys if you have:

ONE KD or ONE HUNDRED MILLION KD in your account – CBK are guaranteeing you wont lose a fils.

Consider CBK as the Guardians of Kuwait’s Banks.

I saw people sending SMS around saying GULF Bank has gone bankrupt.

Disgusting, panic induced behavior over NOTHING. It’s a TRADING LOSS by a CLIENT OF THE BANK who is refusing to accept the Loss.

It has NOTHING to do with the World Financial Turmoil.

Stop spreading shit for no reason, you’ll end up looking like morons 2 days from now.

Guys, Maitham Mahmood Haidar was on CNBC a bit earlier, he explained what was going on –

Lulwa Real Estate had a derivative contract open since 2007 or something, against KD 20 Mil collateral. He is saying that GBK should have closed the position as soon as the losses reached KD 20 Mil, which is the way these things work. Apparently, GBK kept it open (or forgot about it, for whatever reason), and they have not closed (even today apparently!), and have losses of around KD 100Mil on it. They asked him to pay for the losses, he said no way morons, its your fault.

This is second hand from a reliable friend, someone here back me up/correct me if they saw it.

So thats it, its a loss of KD 80Mil at worst (if they lose the lawsuit they are sure to bring against him). And Lulwa R/E is finished.

GBK can afford 80 million, the only reason they are not giving people cash at the branches is because the idiots running the bank have not drawn physical cash from the central bank which is AVAILABLE to them all the time, and which the central bank will force them to take tomorrow probably.

the smoking gnu: that is exactly what I heard, but the amount is a little larger,(200M KD), also that LULWA RE will go bankrupt.
but I haven’t seen it on CNBC! the derivative contract was to be closed at a loss of about 10% but the bank didn’t do anything.

but whats weird is that Mahmoud Haidar has annouced that he has nothing to do with it in a statement related to Zommuroda company. how come ?

This is what happened to Washington Mutual. The FDIC insures deposit up to $100,000. When news about trouble started surfacing small and big businesses with draw billions of their money in one day, which made the bank loss liquidity! The next day the Federal Government took over the bank to avoid bigger disaster. I hope we don’t see this happens in Kuwait.
I hope the bill include a clause that strips the bank executives and CEO from their positions once the government bails them out. They are the one who jeopardized their clients money by taking risky investment overseas and not investing the money locally.

@momo –

I’ve been hearing versions of the same story for a while too ; while the numbers change, the names of the people/companies involved doesn’t.

There aren’t many clients GBK would keep that large of a position open for other than Mahmood Haidar & Co…. who are also board members.

As to the losses, I can’t really say, but KD 80-100Mil is what I’ve heard. The position would have been closed by GBK’s broker by force once it exceeded whatever they had put as collateral, so there is a maximum limit on what it can be.

Smoking Gnu, that’s not strictly true.

Currencies, because of their incredible leverage capabilities can often shoot way above / below the ‘stop’ prices set by institutions to safe guard against loss beyond initial capital.

Example:

A stop market order triggers at 125, it’s possible in extreme cases (what we say on fastmarket Friday) that you could get executed at 120 (the next highest bid) – a full 4-5 bp’s beyond what you expected to sell at.

This 5 basis points could be worth astronomical amounts of money, especially if the initial trade was highly leveraged which is TYPICAL of Currency Trading.

Like I said in another post, with currencies, it’s possible to borrow 50,100, 200 x your initial money.

Imagine they had 5m KD down giving them leverage of 250m KD buying and their stop market triggers at 125 and gets filled at 120.

You do the math.

This is an embarassing fuck up on the part of Gulf Bank. Of course the CBK will cover the deposits and I don’t think there is any threat to people’s money anyway, but would you want your money in a bank run by a bunch of reckless and irresponsible idiots?

Letting a risky leveraged deal run on cruise control which resulted in a loss of 100 million KD or more is criminally insane. This could have been easily avoided if someone had their eyes on the ball. Bad management. The lot of them should be thrown in jail.

I moved most of my money from GBK to NBK today and its a good chunk. Once the trust is gone, I’m gone! No ands, ifs or buts.

cbk appointed members of their faculty 2 run gulf bank, thngs will go back 2 normal only after all the old men transfer their funds to any other bnk

those ppl panicking are so silly, babo… this is Kuwait, government will back up all major investments in here. even if the bank go bankrupt, people will always have their money.

Bank does not know when to close a bid or something ! come on !
how come ! hehehe does not make sense at all !
well either it was KD80 million or KD200 million it represent a very large amount when you compare to their net profit or even thier profit in general but again who runs this bank anyway ?

people should withdraw/close their accounts/funds coz they will not trust such a bank with such idiots

Frankom, the Gulf Bank is not full of idiots. By all means, if you don’t fully understand what’s going on then kindly do away with your opinion. No-one requires reading the opinion of someone who just doesn’t get it. You’re wasting everyones time and jusrt making things worse by adding to the problem. It’s people like you who love to spread these cheap rumors making a big deal of the simpliest things ever. Geez.

GB has not lost. For all of us who actually READ the press release and have watched the news, we all KNOW that it’s just ONE person who lost that is unwilling to pay for his losses, not the bank. The banks money is unaffected, they actually profitted in the third quarter.

To all the people who think they need to withdraw their money, you don’t need to because the CBK officially stated it will stand by the Gulf Banks side so there is really no need to panic, it’s all good at the end of the day. Just another one of those mini-crisis’s which is happening at the time where the global economy has collapsed.

I personally have a sum of money in the Gulf Bank and am planning on leaving it there because nothing is wrong, as Mark stated(Thank you).

Mark,
I think there are people here who have no even a idea about the global market. Better to close this in order to damage more …..

an update – Central Bank just opened their vaults for Gulf Bank earlier tonight, and told them to take as much cash as they need. People will be able to withdraw as much paper money as they want tomorrow morning – glad someone stayed up late to get this done 🙂

@croco –

if the market was dropping ridiculously fast that could happen, but that’s really an extreme case and you’d have to be really unlucky. And 5 bps is way too much even then, if one of the big banks is doing the trading for you. Anyway, there is still a ceiling on how much losses they could have made. So instead of 100mil, 105mil? Anyway there is no way to hide a loss like that, we will all find out exactly how much pretty soon. NBK’s CEO is the one who came up with the KD 200Mil number, I hope he’s just trying to scare people…

Yes CBK will guarantee each persons deposit, but the hysteria which is forcing everyone to withdraw their money will kill the bank. Banks in general can not liquidate 100% of the deposited money, so if everyone withdraws their money then the GB will be in trouble with or without the CBK. So everyone just needs to chill ………..

trouble is, it tends to come out pretty much overnight.
those who think it would be safer to withdraw then do it, and if everyone wants to withdraw 2moro they should be able to as it is their money.

never trusted banks, my salary comes out, withdraw save it in my draw.

It’s funny how many people requested Mark to close this post, honestly for those who requested such a thing go behind your own doors and listen to what you want to listen, just remember that one of the most important facts about the internet is to read in between the lines….

Seems to me that most ignore the fact, that Kuwait is a small country am sure the rumor was spread by the person having made up all that loss to get even with the bank….had they been professional enough to listen it would not have even gone that far….. one thing that spreads like wild fire here in Kuwait are rumours, believe it or not it was the first message I got this morning…..

Sure I feel sorry for the real estate company, and I honestly hope that the people responsible at Gulf Bank will be held liable for such negligence, it’s not the first time they have made mistakes everyone makes mistakes, the sad truth is, Kuwait law protects the banks in every possible way, so sure let them screw up at the expense of others…. about time someone passed on this message even though it was a false rumor am sure the panic must have costed them more then they were willing to risk in the first place…..we at kuwait are good at pointing fingers… but we do not assume any responsability, take the stock exchange as an example, everytime some one there cries out am broke, the government intervenes, talk about baby sitting….

Guess the war after all has not taught us much.. apart from being in denial all the time…..

LBA14 : Keep your money this is your issue now, do you think im making fun of it ? rumors ! duh ! i received and i believed you received also tons of smss last night but do we really believe on what they said ? this is media.
Tell me if CBK will pay that amount now, then GBK have to pay it latter right ? IF AND ONLY IF the customers who made this issue with Gulfbank would pay it !! عشم أبليس بالجنة

بالعربي الفصيح
نقلا عن كلام الثنيان .. البنك راح يتحمل (الخسارة) حاليا .. خسارة خسارة خسارة
الا حين البت في الموضوع
يعني قضية وتحقيق
بالبنك راح يصير مطلوب من الصوبين من البنك اللي اصلا يطالبه ومن البنك المركزي ومن العملاء

ولعملك هناك مستندات ووثائق مخفية او تم اختفائها

It was a pretty cheap move by NBK’s Mr.Dabdoub to blindly announce the loss figures for Gulf Bank even before the Central Bank and Gulf Bank themselves did so..HOW THE HELL would they know this even before Gulf Bank calculated the figures????One would have thought that the other local banks would try to be supportive of each other..This could have happened to any bank in the Middle East..

But I have to say..very opportunistic of NBK to dive in for the “rescue of the GBK customers” in panic..

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