AlQabas reports today that KFH, Commercial Bank of Kuwait, Gulf Bank, and Burgan Bank today launched the first steps towards suing the two groups after becoming convinced that negotiations had reached a dead end. From the article, it sounds like negotiations never took place. Quoting unnamed banking sources, AlQ says that the complaints were lack of response to repeated contacts (no answers) or agreeing to meetings but not showing. Kind of hard to conduct negotiations under those conditions.
The four banks are owed some US$1.5 billion. Legal advisors have apparently been selected. Formal launch of legal proceedings is not expected for at least one month while loan files are put together (I'm assuming this refers to work at the lawyers since presumably the banks had their files together for their negotiations) and a decision is made as to where to file the suit. Complicating factors are the diversity of governing laws for the debts (English, Kuwaiti, Saudi are mentioned), different types of credit extensions - bi-lateral loans, syndicated loans (in which Kuwaiti banks are participants). And I'll presume since KFH is involved some are structured as "Islamic" loans. The latter point - where to file - will be a choice of the most preferred/advantageous law (from the creditors' standpoint) as well as the opportunity to put "hands" on the two group's assets.
The Central Bank of Kuwait is said to be fully supportive.
The article notes that international banks are also reported to be getting ready to launch legal actions.
It also comments that Ahli United Bank has already (and it's been some time now) sued Saad Group in New York.
And what is perhaps the most relevant point here, the Central Bank of Kuwait has told the banks that they must comply with its request for 100% provisioning for the two groups by 31 December 2010.
Judging by that latter comment, I suppose the appropriate thing to do here is wish the banks in Kuwait الله معكم
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