- Obama shortens sentence of inmate from Cape (1/19/17)9
- Business notebook: Jackson salon owner also opens a clothing store (1/16/17)
- Area hospitals hope a box helps prevent infant deaths (1/19/17)6
- Jackson police describe night of anger, car crashes, drug possession by 18-year-old (1/22/17)5
- Two subjects of interest in 1992 homicide to take polygraph tests (1/15/17)8
- Meat-processing plant faces $70K penalty for Clean Water Act violations (1/17/17)4
- Cape SportsPlex contractor offers a look at the project (1/15/17)14
- Local students to perform with choir at inauguration (1/19/17)3
- Southeast to lose $3.5 million from state in budget cuts (1/18/17)21
- Subjects of interest in 1992 killing take polygraph tests; results not revealed (1/18/17)2
Financial crisis moves to Gulf Arab nations
KUWAIT CITY -- Kuwait moved Sunday to prop up the country's second-largest commercial bank and worked to protect depositors at other domestic banks, dashing hopes the oil-rich Arab Gulf would emerge largely unscathed from the global financial crisis.
The central bank halted trading in Gulf Bank shares because of high derivatives losses, just a day after Gulf finance ministers said the region's banks were insulated against the liquidity crisis that has rippled through the global banking industry.
"The halting of Gulf Bank shares spread panic in the [stock exchange] today because the government has been saying banks are safe from [global financial crisis] losses," investor Ahmed al-Fadhli said an interview.
The Saudi stock exchange -- the region's largest -- fell by 8.7 percent Saturday and is down more than 50 percent since January. Saudi's benchmark Tadawul index closed down about 1.6 percent Sunday, while the Dubai Financial Market sank 4.7 percent, and Qatar's exchange closed down almost 9 percent. Kuwait's exchange was down 3.5 percent at closing.
The losses tracked most other major world market indices, which saw declines Friday.
Neither the government nor Gulf Bank revealed the size of the losses or their timeframe. But Ibrahim Dabdoub, the chief executive of the National Bank of Kuwait, told Al Arabiya television the losses were up to $742 million.
Because most of the region's banking sector is privately held, little is known about the institutions' true risk exposure.
The Gulf Bank news also appeared to have pushed the Kuwaiti government to take a step it has so far resisted -- guaranteeing deposits. The country currently makes no deposit guarantees.
The central bank said it would propose an urgent bill to guarantee deposits at local Kuwaiti banks in an effort to "boost confidence in our banking sector."
The bank woes and nervous market highlighted problems the oil-rich states may still confront as they try to sustain massive spending and high economic growth rates amid falling oil prices and bank uncertainty.
Gulf Bank said in a statement it had advised the central bank Thursday some customers had incurred losses stemming from "the significant decline" in the exchange rate of the euro against the U.S. dollar. Louis Myers, the bank's chief executive, said the losses will "have no major effect on the soundness of the Bank's financial position."
Gulf countries had contended they are largely insulated from the global crisis, in part because of the financial cushion built during years of high oil prices.
In an emergency meeting Saturday, the six Gulf Cooperation Council ministers praised regulatory regimes they said protected them from the crisis.
But their draft agenda, obtained by reporters, said "unjustified fears" still could lead to a "hysteria" of bank runs in the Gulf. And, it voiced the very real fear that foreign investors may pull money from Gulf markets as developed countries' growth slows.
The International Monetary Fund says many of the countries still could see GDP growth of about 6 percent on a regional average.
But the property boom that has underpinned a sizable chunk of the growth could take a significant hit.
The Abu Dhabi-based newspaper The National reported Sunday real estate agents in the UAE capital and Dubai are starting to see a decline in prices for as-yet-unbuilt properties.
The UAE has been one of the more aggressive Gulf nations in tackling the crisis' impact. It has injected liquidity into the economy and cut rates in tandem with the U.S. Federal Reserve.
But in Kuwait, the government has taken a less hands-on approach, angering investors who sued without success to temporarily close the bourse.
On Sunday, traders walked off the floor of the bourse for the second time in less than a week.
Investor al-Fadhli said about 40 brokers left the exchange, walking to the nearby seaside Seif Palace, calling on the prime minister for more government intervention.
Oil prices are particularly important for Kuwait, which has a less diversified economy than Saudi Arabia or the booming UAE. That makes the Gulf Bank troubles even more of a concern in this tiny state, whose 1 million citizens enjoy a sweeping cradle-to-grave government security net.
The various Gulf nations have addressed the global crisis in different ways. Some have injected billions into the financial sector, despite assurances of adequate liquidity. Others have repeatedly cut interest rates or guaranteed deposits.
Saudi Arabia announced a $2.7 billion deposit into the Saudi Credit Bank that was ordered by King Abdullah, Al-Ektisadiyah newspaper reported Sunday. The money is to be used interest-free by lower-income Saudis.
Eds: Elias reported from Kuwait City and El-Tablawy from Cairo, Egypt. AP business writer Adam Schreck also contributed from Dubai, United Arab Emirates.