Gulf bank sinks into red on US subprime crisis

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MANAMA: Bahrain-based Gulf International Bank said on Thursday it suffered a net loss of $757.3 million in 2007 due mainly to its exposure to the crisis-ridden US home-loan subprime market.

The merchant bank said in a statement the loss resulted from revaluation losses and provisions in relation to exposures impacted by the global credit crisis witnessed during the second half of 2007.

The provisions primarily related to structured investment vehicles, and collateralized debt obligations incorporating exposures to the US subprime sector, it added, highlighting the impact of the collapse of the US market for high-risk mortgages.

The loss compared with a net profit of $255.5 million in 2006. Operating income was $292.1 million in 2007, 34 percent up from 2006. GIB shareholders – the governments of the six members of the oil-rich Gulf Cooperation Council – stepped in, however, pumping $1 billion into its share capital, raising it to $2.5 billion. GIB stands strong and sound, with the shareholders having confirmed their ongoing support to the bank… The capital increase exceeds the loss incurred in 2007, chairman Sheikh Ebrahim Al-Khalifa said. -AFP

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