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Global Investment House Plunges after Hiring HSBC to Rework Debt
DUBAI - Global Investment House KSCC, Kuwait’s biggest investment bank, declined to the lowest in more than four years after appointing HSBC Holdings Plc to help renegotiate loans owed to foreign lenders, sparking concern of a default.
Global dropped 8.9 per cent to close at 255 fils, taking the decline this month to 38 per cent.
Global’s lenders formed a “steering committee to continue discussions” on restructuring the debt, which totals $3 billion, at a meeting in Kuwait, the bank said in an e-mailed statement late on Sunday.
“It is clearly weighing very heavily on the minds of investors and you can see that reflected in the markets today,” said M.R. Raghu, head of research at Kuwait Financial Centre, in a phone interview.
“They have a lot of assets, but if they resort to fire sales, they will be forced to book huge losses.”
Kuwaiti banks are suffering from the worst global financial crisis since the great depression with Gulf Bank KSC, Kuwait’s second-biggest bank by assets, announcing losses of 375 million dinars ($1.4 billion) from derivatives trading that sparked panic deposit withdrawals.
It pushed the Kuwait government to guarantee deposits of all banks.
Global has outstanding short-term liabilities of $2.47 billion, according to Bloomberg data compiled from the September 2008 results.
Most of this was incurred for leveraged buyouts. The bank said on December 4 it sold its 14.7 per cent stake in Bahraini bank BBK at a loss of 18 million dinars ($65 million).
Global in a separate statement that day said it requested Commercial Bank to arrange a five-year medium-term loan facility of $1 billion to boost medium-term funding.
A group of local commercial and Islamic banks are evaluating its terms.
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