Kuwaiti Banking Crisis 2009

In Kuwait, several rumors across the market have spurred concern as a couple local companies are believed to have defaulted on over $10 billion this past week. If these are the defaults of only two company’s, one may wonder how high the figure would reach once all the companies disclose their liabilities.

Rumors of a major company’s default have led the Kuwait Stock Exchange in to a deep decline past major support levels. The Insurance, Financial, and Banking sectors were the hardest hit these past few weeks.

“There is a lot of negative news flow from the banking sector in Kuwait… Banks across the region are under pressure because of fears over potential impairments from Saad and Algosaibi… Kuwait banks’ potential losses from these two groups would be minimal compared to the size of their loan books, but any write downs will hit profits.”

- Talal al-Loghani, Kuwait Finance and Investment Co.