Kuwait Bank Warns of Loan Default

Global Investment House (GIH), the largest investment bank in Kuwait, has been downgraded to a notch above default by Fitch Ratings after the bank warned it may default on a loan, The National reported. The rerating to a ‘C’ came after GIH told Fitch that it is unable to repay a loan which matured yesterday. The company has a grace period of 72 hours to meet the obligation before defaulting. The downgrade followed the announcement from GIH earlier this month that it was seeking US$1 billion (Dh3.67 billion) from local banks. The global financial crisis has made it difficult for regional banks to roll over their debts, with international sources of funding growing scarce. GIH relies heavily on interbank funding to maintain its operations, which has made the bank especially vulnerable to the credit crunch. Kuwait’s government has taken several steps to support the local financial system, including using its sovereign wealth fund to prop up the local stock market. On Monday the central bank of Kuwait said it plans to buy assets of faltering investment companies in the country in return for financial support, according to the Kuwait-based daily, Al Qabas. Read more.