This is my first post, so I'll start with something easy.
I woke up this morning to the headline Kuwait halts trading on Gulf Bank after losses. What?!
Throughout the morning other news started to flow:
Kuwait to guarantee deposits after Gulf Bank losses
Kuwait Plans to Guarantee Deposits
Falling shares trigger Gulf protest
Here's the money quote: "The central bank's comment follows the temporary suspension of trading of Gulf Bank shares on the Kuwait Stock Exchange in reference to investigations on transactions concluded by Gulf Bank on behalf of its clients in the global foreign-exchange market" WSJ
So apparently Gulf Bank in it's infinite non-wisdom has extended loans to clients engaging in their foreign exchange derivative instruments;
"Central Bank of Kuwait said it had received information from Gulf Bank on Thursday after market hours that some customers have lost the money that they had invested in the bank's derivatives contracts ahead of the fall of the euro against the U.S. dollar." WSJ.
My question is however, Why weren't these loans covered by strictly enforced margins to protect the bank? And if they were, what happened? Who screwed up?
And most importantly, How big are these losses?
So many questions, and no answers.
The good news is, people with money deposits at Gulf Bank have been told by CBK not to worry, your deposits are guaranteed. If you're however an investor in GB stock.. :(