Gulf Bank May Have Loss as Derivatives Contracts Sour

Gulf Bank KSC, Kuwait's fourth- biggest lender by market value, may suffer losses after some clients defaulted on derivative contracts linked to the euro, sparking concern regional banks may be further hit by the global financial crisis.

The losses were incurred on currency derivatives after a decline in the value of the euro versus the dollar, state-run Kuwait News Agency said today, citing central bank governor Salim al-Sabah. Gulf Bank will have to absorb the losses until an agreement can be worked out between the bank and its clients, the news agency cited the central bank governor as saying.

The defaults will have ``no major'' financial effect, Chief Executive Officer Louis Myers said today. He declined to comment on the size of the losses. Gulf Bank may have incurred losses of as much as 200 million dinars ($746 million) from derivatives contracts used for speculative trading or hedging...