KFH's CEO Vows Support For Aref Investment

Both AlWatan and AlQabas carried identical articles today relaying a CNBC-Arabiyya interview with Muhammad Sulayman Al-Omar, CEO of KFH.

He said that KFH which owns 52% of AIG (the KSE gives the holding at 53.08%) intends to act as lead bank in AIG's restructuring of its US$450 million in debts.  The company has good assets and it just needs time for them to recover their value and for AIG to return to its position in the market. 

Part of the strategy is to extend short term debt to give the company sufficient time for asset values to recover.  He mentioned new tenors between 18 months and 5 years.  

If you've been following news on the Kuwaiti financial sector, you know that there have been some rumors about KFH's financial position - including one about one to two weeks ago that the Central Bank of Kuwait was putting pressure on KFH which had disturbed their relationship.  KFH dismissed this as unfounded market rumor.

In his CNBC interview, Al Omar took pains to point out that KFH was doing just fine.  He noted that since AIG is consolidated into KFH's financials there will be no sudden surprise from its losses.  In good Essam Janahi fashion he noted that in any case most of these losses were unrealized. In a similar vein,  I have a colleague who has an "old" General Motors stock certificate in a very nice frame on his office wall.  Since he has not sold it, I believe that technically he hasn't realized the loss yet. 

Al Omar also described progress at KFH Malaysia - it has restructured its debts and a new GM has been appointed. There has been growth in assets of 7%, deposits 17%, and shareholders' equity 30%.  And that it had Malaysian Ringgit 485 million in revenues and MR 162 million distributed to shareholders. 

He also mentioned some other overseas subsidiaries under the rubric that their progress showed that KFH's franchise was broad enough to withstand any negative impact.