Kuwait, (March 22, 2009): Gulf Bank reported a net loss of KD359.5 million for the year 2008, mainly due to exceptional losses in derivative transactions, but also from losses on its investment and loan portfolios relating to the global financial meltdown.

In January 2009 the Bank successfully raised KD 376 million as share capital and share premium in a right offering to existing shareholders with the unsubscribed portion of 16% taken up by Kuwait Investment Authority.

Commenting on the results, Kutayba Alghanim, Gulf Bank's Chairman since October 2008, said: "2008 proved to be a difficult and disappointing year for Gulf Bank due to the exceptional losses incurred in its derivatives operation.  The Bank is examining its entitlement to recover these losses from those responsible.

In conjunction with the Central Bank of Kuwait, prompt and remedial action was taken to limit the Bank's losses and I am confident that the Bank enters 2009 with a clean slate. It has a strong balance sheet after the successful Rights Issue, a refocused strategy and, most importantly, a real determination to succeed in the future and regain its rightful reputation as a provider of world-class banking products and services.

However, improvements that will result from restructuring within the Bank will take time.  Only with extraordinary human capital and a best-practice structure that facilitates agility and dexterity will the Bank be able to best serve its depositors and reward its shareholders with consistently good returns over the medium to long term through the generation of sustainable and quality earnings."

He continued : " Our Bank's  strategy consists of 3 major elements:

" Identify and implement "best practices' throughout the organization.  This will include the way we do things throughout the Bank, the tools we use, and the relentlessly "customer driven" priorities we set.

" Reverse a pattern of underinvestment in the Bank in the past, with better technology, new branches and of course, a considerable increase in investment in our human capital, as we all know that good people are behind all good businesses.

" Ensure that the Bank is secure.  We will manage risk effectively so that our shareholders and our customers are well protected. We will implement a bank-wide upgrade of risk management systems and processes so that credit risk, market risk and operating risk are tightly monitored".

For 2009, the impact of the economic downturn is being felt in Kuwait as it is in  all other parts of the world. Like other banks worldwide, Gulf Bank is not immune to this phenomenon, though the Bank is in a sounder position due to the recent recapitalization and additional provisions taken in 2008.

Gulf Bank re-affirmed its position as a leading Kuwaiti employer, once again winning the Localization Award from the GCC Council of Ministers for Social Affairs and Labour, that was presented to the Bank in Qatar in November 2008, for the fourth consecutive year, for achieving the highest rate of Kuwaitization of any company in the country's private sector and for its investment in the development of the skills and abilities of Kuwaitis.

"I would particularly like to thank all our customers and staff for their loyalty and patience over the last five months, which were the most difficult months for Gulf Bank since its inception, as well as for the entire Kuwaiti banking sector. I can assure them that their trust in Gulf Bank was not misplaced, that our commitment to them as provider of high quality financial services is as strong as ever and that Gulf Bank will emerge an even healthier and stronger financial institution." Alghanim added.

In closing Alghanim said:  "On behalf of the Board, I would also like to extend my gratitude to His Excellency Sheikh Salem Abdulaziz Al-Sabah, the Governor of the Central Bank of Kuwait, Dr. Mohammad Al Hashel, Deputy Governor, Mr. Yacoub Al Muzainy, Controller, and those of his senior officials who have been so supportive throughout the last five turbulent months in restructuring the bank and protecting the depositors and your funds.  Without their unstinting support, we would not be where we are today.