x Abu Dhabi, UAEMonday 24 July 2017

Global Investment House investors rally despite loss

Desipte a full-year loss of more than US$500 million, investors are rallying around Kuwait's Global Investment House

A full year of loss of more than US$500 million has failed to dampen investor enthusiasm for the troubled Kuwaiti bank Global Investment House (GIH). GIH is restructuring $1.73 billion (Dh6.35bn), but has set aside fewer provisions to cover bad assets. The company yesterday reported a full-year net loss of 148.8m dinars (Dh1.89bn) for last year, compared with a net loss of 257.6m dinars a year earlier. Shares in GIH closed 6 per cent higher to 106 fils on the Kuwait Stock Exchange yesterday.

Impairment provisions made by the investment bank declined last year to 35.2m dinars from 153m dinars in 2008. It is two months since the investment bank's shareholders approved the transfer of investment and property assets under a debt restructuring plan agreed on with creditors in December. The narrowing of GIH's full-year losses indicates it may be the latest Kuwaiti company on the path to recovery from the financial downturn.

GIH asked its banks for a rescheduling of its payment terms after it announced in January last year that it had defaulted on most of its debt as a result of the financial crisis. The bank's current debt will be repackaged into multi-currency, conventional, Islamic and bilateral facilities, based largely on the terms of its existing syndicated loans. The company also said yesterday it made a 200,000 dinar profit from selling a stake in its Egyptian property finance unit, Real Estate Finance, to Arab African International Bank.

The value of the transaction was 2.4m dinars, GIH said. In response to the financial problems at investment companies, the Kuwaiti government launched a rescue plan worth 1.5bn dinars last year. It also passed the financial stability law to help Kuwaiti investment companies seeking legal protection from creditors. A bill to establish an independent capital markets authority to administer the local exchange is also awaiting final approval from the Kuwaiti government. A combination of government agencies and the stock exchange previously fulfilled the role.

tarnold@thenational.ae