Gulf Banking Crisis Gets Even Worse

When Arabs freak out about money it’s not a good thing.

Bloomberg: Customers rushed to withdraw money from Gulf Bank KSC, Kuwait’s second-biggest bank, after clients defaulted on currency contracts and the central bank was forced to guarantee deposits.

In the first signs of a bank run in the Persian Gulf, some Gulf Bank customers demanded money in a panic, Fawzy al-Thunayan, general manager for board affairs, said in an interview today from Kuwait. Trading in Gulf Bank shares was suspended for a second day on the Kuwait bourse.

“Some have withdrawn funds,” said al-Thunayan, who declined to comment on the size of the losses or disclose how many depositors had withdrawn funds. “We can’t blame them.” The bank is “concerned, definitely, but not afraid.”

Kuwait’s central bank will guarantee deposits at Gulf Bank, which remains solvent after client defaulted on currency derivatives contracts, the state-run Kuwait News Agency cited Kuwait Finance Minister Mustafa al-Shimali as saying yesterday. A guarantee of bank deposits in Kuwait will make it the second country after the United Arab Emirates who to have done so in a bid to shore up confidence.

See Also: Even Arabs Need Bailouts

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