Global Financial Troubles Reaching Into Gulf States - Download Free Phim, Nhac, Phan Mem, Karaoke

conmeo · #1 (**permalink**) 10-27-2008, 03:31 AM

The global financial crisis extended its reach into the Persian Gulf states on Sunday, as Kuwait suspended trading in shares of a major bank and the Saudi authorities announced a plan to help citizens receive credit.

The Central Bank of Kuwait halted trading in Gulf Bank, one of the country’s largest lenders, after a customer defaulted on a derivatives contract. The central bank said it would “strongly support the bank’s financial position” and protect depositors, to assure the public that Gulf Bank’s business would not be affected.

Major oil-producing countries had seemed to be insulated from the crisis shaking the foundations of the international financial system. Oil prices rose during the first half of 2008, giving such countries a thick cushion of cash. But a drastic drop in oil prices has left the gulf economies vulnerable. Many oil-rich governments became dependent on high prices.

After reaching a record of more than $147 a barrel in July, prices have collapsed. On Friday, oil futures settled in New York at $64.15 a barrel, falling $3.69 even after OPEC announced that it would reduce production by 1.5 million barrels a day.

“This shows the gulf countries are not immune to the overall problems in the financial system,” Olivier Jakob, an oil analyst at Petromatrix in Zug, Switzerland, said during an interview Sunday. “If we get below $60 a barrel, some of these countries will suffer.”

Globally, banks have posted losses and write-downs totaling $681 billion since the start of the credit crisis, according to Bloomberg News.

So far the damage in the Middle East has been limited. But any large losses in the region could require governments to bail out their own lenders and dash hopes that so-called sovereign wealth funds from the region would be able to help rescue troubled institutions in the West.

In Saudi Arabia, always on guard against potential unrest, King Abdullah said that 10 billion riyals, or $2.7 billion, would be placed in an account in the Saudi Bank of Credit and Saving to enable the bank to help hundreds of thousands of citizens obtain loans for family needs, including marriages and home repairs.

On Saturday, finance ministers from the Gulf Cooperation Council and central bankers met in Riyadh, the Saudi capital, to discuss a more coordinated response to the crisis. In a statement, officials “underlined their confidence in the stability of the monetary system in their countries,” and said their economies should continue to grow. In addition to Saudi Arabia, the Gulf Cooperation Council includes Bahrain, Qatar, Kuwait, Oman and United Arab Emirates.

In Kuwait, the central bank also said it was moving toward guaranteeing deposits at local banks. Many other countries have already taken that step, putting lenders in countries with no guarantee at a disadvantage.

Gulf Bank’s chief executive, Louis J. Myers, said the loss would have “no major effects on the soundness of the bank’s financial position, and will not affect its ability to continue business.”

Fawzy al-Thunayan, a spokesman for Gulf Bank, said Sunday that the loss was incurred by a Kuwaiti company on a “complicated currency derivative,” essentially a bet on the euro. “The position worsened in the last 10 days as the euro dived against the dollar,” he added, but the customer had been unable or unwilling to make good its losses.

The bank will not comment on the amount of the loss “until the position is completely closed,” he said, and trading in Gulf Bank will remain suspended until the affair is settled. Ibrahim Dabdoub, chief executive of the rival National Bank of Kuwait, told Al Arabiya television that the losses were as much as 200 million dinars, or nearly $750 million.

The crisis could hurt the gulf states in other ways. KPMG International, the accounting firm, warned last week that financial fraud in the region could run into the billions of dollars a year. Colin Lobo, a KPMG partner, said the financial crisis was creating an environment “where the risk of fraud will increase as businesses come under pressure to show results. Likewise, individuals will also be tempted where costs are rising and income levels are flat.”

Stocks in the region are off about 40 percent this year.

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