KUWAIT, (Reuters) – Gulf Bank, Kuwait’s fifth-largest lender, said on Monday its business was functioning normally and it had seen no major withdrawals by clients after it had to seek help to plug derivatives losses.
“The central bank fully stands beside us … Things will calm down,” General Manager for Board Affairs Fawzy al-Thunayan told Reuters, adding that the board had no plans to resign.
The Gulf Arab state’s central bank stepped in to save the bank on Sunday, appointing a supervisor for its treasury business after the lender got hit by losses from trading on currency derivatives.
When asked about customers lining up outside the bank’s headquarters on Sunday immediately after news of the troubles, he said: “It’s the time of salaries … It’s the end of the month.”
Fawzy declined to say how much money had been withdrawn yet, saying only it was not significant.
He also declined to specify the measures being implemented by the central bank.
“There is no specific pumping into the bank yet,” Fawzy said, when asked about an unsourced report by daily al-Qabas that the central bank had injected a “huge” amount of money into the bank.
The problems of Gulf Bank, which posted two straight quarterly profit declines, forced Kuwait to guarantee deposits at local banks on Sunday in an effort to restore confidence.
Trading in Gulf Bank’s shares remains suspended until the central bank concludes an investigation into the derivatives losses.
Kuwait’s cabinet has set up a task group headed by Central Bank Governor Sheikh Salem Abdul-Aziz al-Sabah to tackle the impact of the global financial crisis on the world’s seventh-largest oil exporter.
Daily newspaper al-Rai said in an unsourced report that the cabinet gave initial approval to allocate up to 2 billion dinars to the task group.
Meanwhile, al-Anbaa newspaper quoted banking sources as saying several Kuwaiti banks are considering merging to curb the impact of the global credit crisis, adding that the central bank is looking at four such requests.