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Gulf Bank 'receives many merger offers but time not right for deal'

Kuwait's troubled Gulf Bank has received "numerous" merger offers but believes the time is not right for a deal, its chairman said.

  • Reuters
  • Published: 23:25 December 2, 2008
  • Gulf News

Kuwait: Kuwait's troubled Gulf Bank has received "numerous" merger offers but believes the time is not right for a deal, its chairman said.

Gulf Bank, the country's fourth-largest lender by market value, is the only lender in the Gulf Arab region that has had to be rescued by a government as a consequence of the global credit crisis, having made losses on currency derivatives deals.

Chairman Kutayba Al Ganem told state news agency Kuna that Gulf Bank would not get a good price in the current conditions.

"It is not the right time to discuss any such attempts for Gulf Bank due to the fact that right now the bank will be the weaker rather than the stronger party," Al Ganem said, when asked whether the bank would be merged.

Emergency approval

The bank, which is only active in Kuwait - where the central bank has imposed restrictions on consumer lending to fight inflation - had mandated a "prominent" investment bank to advise it on potential mergers, he said.

Al Ganem said he was confident shareholders would approve later on Tuesday an emergency rights issue worth 375 million Kuwaiti dinars (Dh5 billion) to cover its derivatives losses.

The country's top sover-eign wealth fund, the Kuwait Investment Auth-ority (KIA), will buy any shares from the issue left unsubscribed by shareholders. KIA's support role matches that of other sovereign funds such as the Qatar Investment Authority, which have rushed to support local banks as the global crisis bites.

The government has guaranteed all deposits at banks in a bid to restore confidence after Gulf Bank's difficulties raised investor fears.

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