By Robin Wigglesworth in Abu Dhabi
Published: October 29 2008 02:00 | Last updated: October 29 2008 02:00
The crisis in Kuwait's banking sector deepened yesterday when the chairman of Gulf Bank resigned over derivatives losses and Fitch Ratings downgraded the bank, the country's second biggest lender.
Kutayba Al Ghanim replaced his brother, Bassam Al Ghanim, as chairman of Gulf Bank after depositors started to withdraw deposits from the stricken lender on Sunday - the first known bank-run in the region during the crisis - even though the Kuwaiti central bank pledged to support the bank and guarantee all deposits in the country.
Fitch Ratings downgraded Gulf Bank's individual rating to D from B/C. While affirming the long-term issuer default rating of A+, the agency placed the bank under review for individual downgrades for a "serious lapse" in risk management and possible capital base erosion from "potentially large losses".
Adding to the bank's woes, Moody's Investors Service yesterday placed Gulf Bank's Aa3 long-term local and foreign-currency deposit ratings, and C bank financial-strength rating on review for possible downgrade. The Prime 1 short-term ratings were not affected, according to the credit rating agency.
"It is completely understandable. I wouldn't trust them [the ratings agencies] if they hadn't done this," said a Gulf Bank spokesman.