Posted on 10/27/2008 10:51:49 AM PDT by bank run
Gulf Bank KSC, Kuwaits second-biggest bank, reported that clients defaulted on currency contracts and the central bank was forced to guarantee deposits.
In the first signs of a bank run some Gulf Bank customers demanded money in a panic. Trading in Gulf Bank shares was suspended for a second day on the Kuwait bourse.
Kuwaits central bank will guarantee deposits at Gulf Bank, which remains solvent after client defaulted on currency derivatives contracts, the state-run Kuwait News Agency cited Kuwait Finance Minister Mustafa al-Shimali as saying yesterday. A guarantee of bank deposits in Kuwait will make it the second country after the United Arab Emirates who to have done so in a bid to shore up confidence.
Gulf Bank may have losses of as much as 200 million dinars ($746 million) on the trades, Ibrahim Dabdoub, chief executive officer of National Bank of Kuwait SAK, said yesterday. Gulf Bank had assets of 5.09 billion dinars at the end of March and deposits of 3.2 billion dinars, according to data. It has 44 branches across Kuwait, its Web site says.
Kuwaits central bank will propose a bill to parliament to guarantee deposits in the countrys commercial banks, KUNA reported yesterday.
(Excerpt) Read more at globalbankrun.com ...
I see you’ve just joined, kiddie. How about you fly away troll and Ill continue to put my trust in the free market (where it belongs).
Welcome to FreeRepublic.
Some here see the economic crisis as just a ruse to get the dems in power. Some of us know that this is not “just trash the economy” talk at all.
The world is under major stress, and it seems the central banks don’t have a clue, or are deliberate in their not fixing the problem.
Iceland, anyone? We could be next for all we know.
We really don’t have “free markets” anymore with all the opaque CDS’s out there. And “dark pools” of money. No, there is just the crap shot of how long will it take before the dollar crashes.
http://www.financialsense.com/fsu/editorials/deepcaster/2008/1024.html
Roubini Sees `Silent' Run on Banks, Urges `Triage': Bloomberg
http://www.rgemonitor.com/roubini-monitor/253818/roubini_sees_silent_run_on_banks_urges_triage_bloomberg_radio_interview
Oct 1, 2008
You can listen here to an audio of a 44 minutes interview that I gave on Bloomberg Radio yesterday September 30th. I will elaborate later today on the rising risk of the "mother of all bank runs", i.e. the risk of a run on the uninsured deposits in the US banking system. In Q2 of 2008 the FDIC reports $4462bn insured domestic deposits out of $7036bn total domestic deposits; thus, only 63% of domestic deposits are insured. Thus $ 2574bn of deposits are not insured.
Given the risk that many banks small, regional and national may go bust (as even large ones such as WaMu and Wachovia went recently bust) there is now a silent run on parts of the banking system. Deposit insurance formally covers only deposits up to $100000. Thus any individual, small or large business and/or foreign investor or financial institution with more than $100000 in a FDIC insured bank is now legitimately concerned about the safety of its deposits.
Particularly at risk are the cross border short term interbank lines of US banks with their foreign counterparties that are estimated to be close to $1 trillion. I will also discuss later today the appropriate emergency policy responses necessary to prevent this "mother of all bank runs" (i.e. the need for a temporary blanket guarantee on all US deposits combined with a rapid triage between insolvent banks that should be quickly closed and distressed but solvent conditional on liquidity and capital injections banks that should be rescued).
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