Kuwait Central Bank To Guarantee Deposits As A Bank Reports Losses

Kuwait City, Kuwait (AHN) - The Central Bank of Kuwait has announced that it is considering guaranteeing deposits in the country's financial system after one of its largest banks tumbled on the Kuwait Stock Exchange.

Gulf Bank KSC, the country's fourth-biggest lender by market value, has been suspended by the central bank effective Sunday after the firm's year-to-date losses increased around 19 percent.

On Friday the Kuwait Banking Sector Index plunged 3.9 percent following reports that the bank could suffer heavy losses on some clients defaulting on derivatives contracts.

The Central Bank of Kuwait announced that it will keep the trading of the bank suspended till it completes the investigation into the derivatives deals that led to the financial losses, which may reach up to $750 million.

Central Bank of Kuwait received information about the losses from the bank on October 23 saying that some of its clients incurred financial losses as a result of the substantial drop in the exchange rate of the Euro against the U.S. dollar.

"The loss to be incurred by the Bank as a result of the above-mentioned dealings will have no major effects on the soundness of the Bank's financial position, and will not affect its ability to continue business," CEO of Gulf Bank Louis Myers said in a statment.

The Central Bank of Kuwait has assured that it will support the bank's financial position and completely protect the depositors' rights.