Scant relief at Global as bout of pain continues

What's Down: Prospects for Global Investment House are looking bleak as the Kuwaiti investment bank reports its fourth year of losses.

Few lenders have fallen as far as Kuwait's Global Investment House as a result of the global financial crisis.

There was little let-up yesterday, after the bank - once among the biggest in the Gulf - reported full-year losses during 2011 of 57.5 million Kuwaiti dinars.

Although Global narrowed its losses of 75.3m dinars from a year earlier, it has lost money every year since 2008.

The bank's share of losses from associates, many of which are exposed heavily to property in Dubai and Bahrain, alongside its own write-downs on property investments and financial assets, resulted in negative revenue for the year.

Global returned to creditors last year in an effort to renegotiate the initial terms of its 2009 debt restructuring programme, which was thrown into doubt as a result of the European debt crisis. In the meantime, it is rapidly refocusing its operations.

"A strategic review of the company's entire operations and branches was conducted 2011, and where near-term break even was not feasible, a decision was made to close the operations," Global said in a statement.

That review has resulted in closure of brokerage operations in Saudi Arabia and Dubai, scaling back on investment banking operations in Egypt and Jordan and layoffs across the board.

But even that might not be enough, according to the company's auditors. Global had accumulated losses of 108.2m Kuwaiti dinars at the end of last year, and its survival may depend upon its ability to restructure debts while repayments are deferred to next month.

"The management of the parent company is actively seeking a consensual resolution of the issues and material uncertainties which may cast significant doubt about the group's ability to continue as a going concern," auditors from Ernst and Young wrote in a research report.

The bank's cost of funds increased by 2 per cent to 24.3m dinars as a result of higher interest payments on its restructured debts. Its shares have been suspended since December.

The bank's dispute with the National Bank of Umm Al Quwain has also hit it hard. A verdict on the case is expected on Monday.

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