Gulf Bank sweeps board, plans emergency issue after investment losses

19 November 2008

Kuwait's Gulf Bank is to conduct an emergency shares issue and institution's entire board of directors has resigned after an external audit revealed that the bank has lost 375 million dinar (£919 million) trading in financial derivatives.

After a meeting of the board on November 17th, the bank's chairman Kutayba Alghanim said it would seek to issue 1,250 million shares - the equivalent of 100 per cent of its capital at the end of September 2008 - in order to raise around 375 million dinar and return the institution to its previous position.

Shares will have a nominal value of 100 fils per share, with an issue premium of 200 fils to encourage existing stockholders to take part in the issue, Mr Alghanim said in a statement.

Priority will be given to existing investors on the basis of their capital holdings, he added.

State-owned sovereign wealth fund the Kuwait Investment Authority will buy up any shares that go unsubscribed.

The bank is now working to convene an ordinary and extraordinary general assembly meeting to ask shareholders to approve the emergency issue, Mr Alghanim said.

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