Can Kuwait help Dubai?
Kuwait has offered to help the UAE financially with Dubai’s debt woes. But is Kuwait in a position to lend a hand?
December 16, 2009 3:29 by Aarti Nagraj
Kuwaiti bank Global Investment House announced last year that it had defaulted on most of its $3 billion loan, and then started talks to reschedule its debt in December 2008. “We will scale back our direct investments and real estate,” chairwoman Maha al-Ghunaim said in June this year.
Kuwait’s financial firm Investment Dar said in May that it defaulted on a $100 million Islamic bond and a committee was set up to restructure about KD1 billion ($3.51 billion) of its debt. Earlier this month the firm announced that it had reached an agreement with its creditors and investors on the restructuring.
Another lender in the country, Gulf Bank posted a net loss of KD7.5 million during the first half of 2009 and said in October this year that it used all of the KD42 million ($147.1 million) of operating profit from the third quarter as provisions for bad loans.
However, the economy appears to be getting better.
Kuwait’s GDP is expected to grow 2 percent in 2010 4.5 percent in 2011, according to recent research from Merrill Lynch Wealth Management. However, the firm did say that the estimates could be altered. “The study was made before the recent events in the UAE. [Contrary to the] UAE’s projected figure of 2 percent growth in 2010, the country would actually see zero growth in the coming year,” said Bill O’Neill, the chief portfolio strategist at Merrill Lynch Wealth Management.