Kuwait to guarantee deposits after Gulf Bank losses

just heard that on BBC Radio..

In addition to my answer about the price of the burger from MacDonalds; I rest my case.

Yikes!!!!!!

where did the money go ????????
This bank and the green bank are the one man managing show bank.

hmm i wonder if they will allow me to withdraw my savings

gulf bank sucks

They have just announced no more trading for Gulf Bank stocks in KuwaitSE starting from today.

Why amongst all banks was Gulf Bank affected?

i heard that the gulf bank loss reached 250 Million KD for 2008

explorer : they dealt with derivetives for clients who didnt pay, big clients, check KSE web site

This is because they are selling and trading derivitaves and since everything dropped they had to cover the losses from the investors who bought/sold/traded the derivitaves. But guess what, since the global stocks have gone down, FX rates are going against them, (For example if you sold a put option for Euro, lets say around 1.4000 Level which was cheap around Q1 and Q2, your basically buying it ALOT more expensive now,) and because liquidity is tight, some of those clients refused to fulfill these obligations, leaving the bank with a big bill to pay to the Int’l banks which are covering those deals. They can’t skip out on them now can’t they.

Gulf bank is also a big lender, guess how many ppl are defaulting on those loans (They said and to quote “only one client related credit write down” when Q3 results were out, rumour has it that it was around 90mil KWD) I’m guessing more, lets just see their year end results. And Central Bank won’t let the bank go under..Anyways some banks in Kuwait have been talking the past 2 days to buy out those writedowns/debts and help them out.

This is what the market said

https://www.4thringroad.com/?p=153

salah/Anon, thanks for the comments..

the next obvious question: how vulnerable are other Kuwaiti banks?

would all this affect consumer banking? layman’s savings??

The board is being hauled off as we speak

Banks here have heavy exposure indirectly to the stock market, real estate and commercial financing, all of which are potential dangers to the banks books. You don’t about those because it takes time until things get reported. Wait until the 4th quarter results get posted and then see how the banks fare. The government could guarantee deposits, but that wont save the banks p&L.

Something Interesting, WHY IS DABDOUB reporting about GBK losses, he’s saying that their losing somewhere between 150mil to 200mil. Legafa or just show?!

Anyways, on CNBC CBK governor said that the bank is safe and consumer’s are safe its just their earnings won’t be as good. All bank deposits will be guarenteed and there will be an investigation on why this information was hidden (and I know their excuse will be that dealings with derivitaves is that its not reported and has nothing to do with KWD dealings) oh well.

Zaydoun, nothing about being hauled off (yet). But their was talk by the governer that a supervisor will be put in place to over look their operations…Like I said no one will go down till we’re out o surplus..which is soon

NBK is a solid bank it survived 1982 and gulf war during 90’s MR dabdoub is a smart man.
they are going strong i think

What about KFH?

Does this affect KFH with all the financing/real estate they’re into?

Anon, dude chill..

Dabdoub reporting about it is simply protocol, relax man. Doubt it has anything to do with “ligafa” or “show”..

People need to be informed, and thats what he’s doing..

so they cant afford the next millionaire at Dana Deposits in the next 5 days ? 🙂

https://www.kuna.net.kw/NewsAgenciesPublicSite/ArticlePrintPage.aspx?id=1947388&language=en

Basically speaking, the scenario is simple.

Trader X shorts USD using a leverage of 50 to 1.

i.e loan KD 50,000 for KD 1,000 on deposit.

USD Rockets against EUR (it hit 1.26)

Trader X gets wiped clean and forces Bank into emergency margin liquidation.

Trader X says piss off, I aint paying for the loss.

Gulf Bank left to nurse the wounds.

Government steps in, will likely pay for Trader X’s mistake.

Obviously, on a much much larger basis than KD 50,000 (leveraged) loss.

I guess it was a rumour…

But I do have a source telling me that there’s a long queue of worried people at the main branch waiting to withdraw their money

i checked the branch across the street for a possible Kodak moment but it looked like business as usual.

Only the Agaad will be outside collecting their money and putting it into a suitcase.

CBK has already said they will guarantee deposits.

Nothing to worry about folks.

Stop spreading panic for no reason.

KFH might be hit with all the Islamic Sukooks against real estate (in short the value of the real estate they placed their sukooks against has gone down, so not enough money coming in as much as going out.), but we won’t see this till they mature in Q1 or Q2 2009. Anyways its a theory I have nothing solid and my understanding of sukooks is basic.

Even though KIA said it is one of the banks they will invest in stock wise..Smart move though by them in stopping their loans against real estate earlier this year.

Anon : I asked my self the same question but so far nobody showed from GBK ! and thats weird ! anyway NBK can report and give any statement regarding any local bank , and by the way CBK ask NBK to watch over GBK on financial issues. and this is also weird heheh

What a bank ha ?

@ rayboy .. they still have al dana booth at Marina ..sour millions i guess !

this is crazy when banks say they are not affected by the current financial crisis.

The meltdown is worldwide.
come Q4 ,most banks will show profit by cooking the books

Regarding the Real Estate Market:

If you look at highly leveraged markets like Dubai, where you can put 5% down on a new apartment, and pay off in a series of installments – then this will affect them a lot more than Kuwait, which is a closed real estate market.

I have been predicting a massive collapse in the Dubai real estate market for over a year now – ever since the subprime issues materialized in the US.

People said it would never spread to the Gulf.

Throughout history, not one single bubble (defined perfectly by ex-Fed Chairman Alan Greenspan) hasn’t collapsed with an incredibly painful unwinding process that typically lasts for many years.

Psytrance : what a stupid, uneducated statement.

Banks are AUDITED by International Firms with a Global responsibility to stock investors.

Look up AUDIT before you talk such stupid shit.

I agree with croco rock completely ; it’s just unnecessary panic created by derivative trading losses . It’s not even their ( Gulf Bank’s ) fault. Everything should return to normal after CBK’s statement

So… will I get a cheaper Big Mac to eat or no?

@ Kuwait: Hahaha….. the best additude to overcome hectic times.

Agree with croco rock..If they said they weren’t affected why the drop in profits lately. Some banks have less exposure than others. some manage better etc etc..if you don’t know anything don’t go out and splurt out comments. Makes you look stupid

Kuwait Finical Crises Starts!!!!

@croco rock
Just because they get audited ,does not mean they cant do it

This is kuwait buddy ,anything goes

A global market collapse is on the horizon… pretty much inevitable.. all we can do is brace ourselves for the decline… This will affect paper money worldwide as well… analysts believe that a result of which would be the undoing of paper money and moving towards a world digital currency… at least that’s what the conspiracy theorists backed by a buncha economists are going at…

Sources indicate that the Rouge derivatives trader is actually one of owner of the bank (Mahmoud Haidar) through Zumurroda’s 10.5% stake in the Bank.

Traffic brought the Guld Bank website down as well 🙂 Looks like the end is nigh for this crappy bank.

Apparently as consumers the only ones to be negatively affected by this are those who owe money to Gulf Bank. If anyone reading this has a Gulf Bank savings account, your money is safe from what I understand. With the central bank moving in, inshallah there will be some positive moves from here on in… anyone have any more input please share it

Mahmoud haider has alot of money… If a bank goes into crisis and a whole country panics and its central bank has to step in with public funds because Mahmoud haider does not want to pay what he owes.. That’s a sorry state of affairs. Because of one client? Doesn’t sound right.
if its true then no need fpr injection of public funds… Just arrest his ass over rouge trading and take hold of his properties and force him to pay up.

By the way…. Cbk lied to us.. A few days ago cbk governor told us that Kuwaiti banks had not been effected by the financial crisis.

There is another rummour out there that there is a travel ban on Bassam Al Ghanem….

Salbader, true..rumor is that he is margin trading and was hit by the Euro but through Lo2lo2a (pearl) real estate. Something around 170mil KWD

Zorbon, I heard that CBK wants a resignation.

So there will be no draw for the Al-Dana KD 1,000,000 on December 31st !!!!

I was counting on that ;(

So are they gonna reduce the Mc Royal meal or what ?

@Fonzie,
According to their website, the Al-Dana draw is still on and they are encouraging you to make a deposit.
https://www.e-gulfbank.com/eng/personal/index.jsp

gents, I believe you mean “rogue trading” instead of rouge..

I’ve heard different numbers for the loss – $50Mil, KD 250Mil, and everything in between, the truth is NO one (but the soon to be ex-board?) knows for a fact yet… the bank will not fail (i.e. close for business) immediately because of currency losses, it will fail immediately if everyone panics and withdraws their deposits.
The problem is these days, people are already panicked, and plenty of money has been withdrawn today (not just the 3agad as someone here said)…
Take your money out if you like people, but the Central Bank will never let any Kuwaiti bank go bust – it would be the end of civilization 🙂

So it finally affects kuwait! Two of my banks in the US were bought over by other firms. I think the worldwide turmoil has just started…

But who cares…we can all grab a Big Mac! ..maybe for cheaper! 😉

OMG….HOW THICK ARE THESE COMMENTS?

THIS IS A CURRENCY TRADE THAT WENT AGAINST THE SPECULATOR.

IT HAS NOTHING TO DO WITH THE FINANCIAL MARKET CHAOS IN THE US AND EUROPE.

THIS LOSS… COULD HAVE HAPPENED ONE YEAR AGO – WHEN THE WORLD WAS STILL ENJOYING ECONOMIC GROWTH AND THE KSE WAS AT 15,000.

IT WAS A SHIT SPECULATIVE TRADE BY AN IDIOT WHO BET THE HOUSE.

SO MANY IDIOTIC COMMENTS. ENOUGH ALREADY.

Well, this is a global economy, and the global economy played a part in it as well. Investors who invest in kuwait also run business in foreign countries. When they make losses in foreign countries, they dont have the money to pay for loans in places like Kuwait as well. I hope you get where I am coming from croco rock. And try to stop the name calling. Talk like an adult.

يروى ان خبيرا ماليا على مستوى عالي طلب منه ان يبسط للناس اسباب الكارثه الحاصلة في اسواق البورصه العالميه فقبل ذلك وابتدأالشرح فقال للناس :

ان رجلا ذهب الى قرية نائيه وعرض على سكانها شراء كل حمار لديهم بعشرة دولارات . فقبل قسم كبير منهم هذا الاتفاق وباعوا حميرهم للرجل . وبعدها بمده قصيره رفع سعر الحمار الى خمسة عشر دولار للحمار الواحد فباع قسم من الباقيين حميرهم ثم رفع السعر ثانية الى خمس وعشرين دولار للحمار الواحد فباع الباقيين حميرهم ثم قال لأهل القريه سأدفع خمسين دولار لكل حمار تأتون به ثم ذهب لمدة اسبوع لتمضية الاجازه في هذه الاثناء اتى مساعد الرجل الى اهل القريه وقال لهم بانه سيبعهم الحمير الموجوده عند معلمه باربعين دولار للحمار الواحد وهم يبيعوها مجددا لمعلمه بخمسين دولار وافق ابناء القريه على هذا الاقتراح وتكالبوا على شراء الحمير ومنهم من باع كل مايملك للحصول على اكبر عدد من الحمير ومنهم من صرف كل مدخراته وهكذا عادوا واشتروا حميرهم من جديد

ومن يومها لم يروا لا الرجل الشاري ولا مساعده ابدا
Hehe great analogy.

While the official line is that the fall down of Gulf Bank was due to a an overleveraged currency trade; it is well known that GB has exposures to hedge funds and other speculative trading vehicles. I doubt the banks are as well governed as we think they are. there lots of mickey mouse business here in Kuwait (maybe as much as out there in the U.S and Europe.) Furthermore, the Sons of Yousef Alghanem, have also a large exposure to General Motors, as shareholders. A company that has recently cut its stock dividend w/ a stock price tanking to a 50 years low! I wonder if GB has a direct or indirect exposure to their investment in GM through a loan or bonds.
In conclusion, it was not the best managed bank at all w/ now so obvious loose internal controls and a fishy CEO that just few days back announced yet another excellent quarterly results!!!!!

Actually if it wasnt for the economic collapse the euro wouldn’t have gone south..If the speculative position was lets say midway thru the drop then and depending on ur view if the situation u could have gone long or short…if ur a tech analyst and expected a rebound and the level u placed ur (for arguements sake) long position was a strong support…guess what supports are broken and they become even stronger resistences so ur screwed bothways..croco nothing is “just a speculative” position if thats ur trading sense in a market it would be (in my view) a rather shite one and a poor trade in my books.

What happened to stop losses and take profits..i just think this was either a marginal trade or a poorly structered option gone bad

Dj Hams: Explain what this has to do with the Global Economy?

Please, let’s here this…..

Be careful, cause you’re going to look like a complete cretin if you write about things you obviously have ZERO understanding of.

@32 croco rock
For my last purchase of 45sm apprtment in Dubai Sports City, developer refused ANY sort of financing arrangement; and term_of_sale was 100% pre_payment.. to the tune of US$ 185,000.00

scary! too much information. i heard so many rumors outside and when i get on site, its more worse 🙁

im keeping my $$$ safe and sound under the mattress at this point!

All hail croco rock, for he knows all. From your comments, we all know how much you know 🙂 Maybe you should go out there and help Gulf Bank and the KSE instead of hiding behind a computer screen. 🙂

Gulf Bank has never been a strong favourite of mine but about 10 years ago, I decided to put some money in Danah Certificates with Al Fanar Branch in the hope of being a Millionaire some day !!!!

Last evening I went to withdraw my money and was mentally prepared to wait in a mile long queue for at least a couple of hours.

I was pleasantly surprised that from the time I arrived at the bank till I walked out with my money, it took less than 20 minutes.

The stafff were extremely courteous and most helpful especially the lady who served me, Ms Dalal Ghazi Aloun, who was ever so willing to help. She indeed is an asset to the Bank.

One thing is for sure that if all issues are resolved, which I hope it will and the bank gets back into operation, I will open an account with them.

Hats off to Gulf Bank and the Central Bank.

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