Tuesday 24 March 2009

Arab states bail out Gulf International Bank

Bahrain-based Gulf International Bank, one of the worst-hit financial institutions in the oil-rich Middle East, has sold $4.8bn of toxic assets to its shareholders, six Arab Gulf governments.

GIB, an investment bank owned jointly by the six hydrocarbon-rich members of the Gulf Co-operation Council, invested heavily in complicated debt-based toxic assets. Due to swingeing impairments and exposure to US banks such as Lehman Brothers, GIB has reported two years of losses totalling $1.1bn.

The bank’s shareholders – led by Saudi Arabia – injected an additional $1bn of capital in February 2008 to prevent the bank from going under and speculation of a Saudi-led takeover has been around since.

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