Troubled Gulf Bank returns to ruder health

Several Gulf banks teetered during the financial crisis but few have suffered as much as Gulf Bank, one of Kuwait’s largest and most established lenders.

After a client was unable to settle a substantial derivatives trade that went awry in October 2008, rumours of severe losses spread and the lender suffered a bank run – practically unheard of in the region.

As a result of losses on derivatives, loans and investments, the bank posted a loss of KD359.5m in 2008. The Kuwait Investment Authority – a 16 per cent shareholder after subscribing to most of a KD375m emergency rights issue in December that year – replaced the chairman, revamped the board and brought in new management to turn the lender round.