More on Awal Bank Chapter 11 Filing

Updated for comments on Chapter 11.

Here are some additional details on Awal's filing.

1. The case number assigned by the Bankruptcy Court of the Southern District of Manhattan is 10-15518-alg.  Awal's previous Chapter 15 filing has case number 09-15923alg.
2. As indicated by the "alg" at the end of the case number, Justice Allan L. Gropper has been assigned this case.
3. The Bank is being represented by Brown Rudnick LLP who filed the Voluntary Petition for Bankruptcy under Chapter 11.
4. The filing was authorized by Awal's Administrator, Charles Russell, LLP.  Presumably before proceeding CR obtained the no objection of the Central Bank of Bahrain who appointed them.  I think this is a pretty strong indication that the CBB has decided to proceed with the liquidation of the Bank.  Note:  A Chapter 11 proceeding is of course a reorganization not a liquidation.  The latter is Chapter 7.  Chapter 11 allows the debtor to propose a plan for dealing with its existing obligations - either payment in full, in part, conversion to equity, etc.  Post implementation the debtor continues as a going entity (e.g., Continental Airlines).  So what I mean here is that the CBB has decided to proceed knowing it will cause the lenders some pain.  That in turn means the situation is beyond repair.  And that the Bahraini authorities have decided to "bite the bullet" and take the reputational damage that will come from such action. 

As part of its filing, Awal Bank made the following statements:

1. After the payment of various expenses including that of administration, there will be no funds available for distribution to unsecured creditors.
2. Estimated creditors are between 50 and 99. 
3. US assets are above US$50 million up to and including US$100 million.
4. Estimated debts (worldwide) are over US $1 billion.  (This is the largest amount provided on the Bankruptcy Filing Form).

As required on the Filing Form, the debtor lists its top twenty unsecured creditors.  No amounts are provided though.

Here they are in the order of appearance on the Form:

1. Abu Dhabi Commercial Bank, Abu Dhabi
2. Abu Dhabi Islamic Bank, Abu Dhabi
3. AlGosaibi Money Exchange, Saudi Arabia
4. Bank of Montreal, Canada
5. Bayerische Hypo-und Vereinsbank, United Kingdom (London Branch)
6. Bayerische Landesbank/Bayern LB Germany
7. Boubyan Bank, Kuwait
8. Calyon Corporate and Investment Bank, United Kingdom
9. Commercial Bank of Kuwait, Kuwait
10. Commercial Bank of Qatar, Qatar
11. Commerzbank Global Equities AG (formerly Dresdner Bank) Germany
12. Commonwealth Bank of Australia, United Kingdom (London Branch)
13. Fortis Bank, Belgium
14. Gulf International Bank, Bahrain
15. HSBC, Australia
16. HSBC, United States (NY Branch)
17. HSH Nordbank AG, German
18. JP Morgan, United Kingdom (London Branch)
19. Kuwait Finance House (Liquidity Management House), Kuwait
20. The International Banking Corporation, Bahrain

If you're wondering about TIBC (which also filed under Chapter 15 in 2009) taking a similar action, a  court hearing is scheduled under their case next week Tuesday (26 October).  Stay tuned.

HSBC: “No Provision Relief for Kuwaiti Banks Until 2012”

AlQabas published a summary of a recent HSBC research report in its Sunday issue.

Here's a quick summary of the main points:

1. HSBC notes the dramatic growth in distressed loans at Kuwaiti banks – from 5.3% in 2008 to 9.7% in 2009. 
2. And predicts that the banks will continue to make substantial provisions this year and next only reaching a normal level of provisions in 2012. 
3. That being said, there should be a recovery in ROE for 2010.
4. Banks in Abu Dhabi and Kuwait were the worst affected among GCC banks. However, Kuwait has average provisions equal to 10% of total loans while Abu Dhabi only 4%. 
5. A concentration on loans to real estate, construction, and investment companies is responsible for the decline in the value of Kuwaiti bank assets. 
6. Real estate exposure:  Given the absence of Kuwaiti government spending on infrastructure or development projects during the boom years (2005-2008) credit was to the private sector largely to individuals and unlisted companies. The focus was on commercial, residential and investment real estate. Listed real estate companies only account for 13% of the total of such loans. 
7. Investment firm exposure:  Loans to investment companies were KD2.8 billion with KD1.2 billion to conventional firms and KD1.5 billion to "Islamic" firms.  The loans granted were largely used to fund investments in real estate and regional stock markets (thus increasing the lenders' total exposure to these sectors). 85% of investment companies' assets are in the GCC as per the IMF. Since the crisis hit, banks have seen their loan security drop by at least 50% as per HSBC's estimates, though it does note that in the absence of transparency the true impact is not known. 
8. Consumer loans:  These extensions of credit are believed to be of better quality because  they are secured by rentals and salaries. HSBC notes that most Kuwaitis are employed by the Government, the implicit presumption being that their incomes are secure.
   

There were two interesting tables accompanying the article, which I've reproduced below.

First, Kuwaiti bank exposure to real estate as a percentage of shareholders' equity.

Amounts in KD millions.

Bank	Real Estate & Construction ("REE")	Shareholders Equity	REE % of Equity
NBK	1,450	1,871	78%
CBK	733	440	167%
Burgan	976	422	232%
KFH	1,591	1,537	194%
Gulf	1,495	391	382%

Second, Kuwaiti bank exposure to investment companies.

Amounts in KD millions.

Bank	Exposure	% of Total	Shareholders' Equity	Exposure as % of Equity
Gulf	486	18%	391	80%
Burgan	190	7%	422	45%
CBK	269	10%	440	61%
NBK	216	5%	1,871	12%
KFH	944	34%	1,537	61%
Others	658	26%	----	----
Total	2,763	100%	----	----

 

From the above one can draw some conclusions on relative business models and underwriting standards.  

Of course without knowing the details of the loans and in particular the security obtained, these can be only preliminary. 


As usual, the pattern seems to be repeating itself.  One bank is distinguished by its prudence.  And some of the same names seem to be pushing the envelope. 

Gulf Investment House - Debt Problems Largely Solved: Only US$7 Million of Foreign Debt Left KD45 Million Rescheduled by KFH

In an exclusive interview, AlWatan quotes GIH's CEO, Badr Abdullah Al-Ali, saying that: 

1. GIH has repaid all by US$7 million of its foreign debt.  The remaining amount is due in November and GIH may prepay given its strong financial condition.
2. The Company has been successful in rescheduling KD45 million with KFH (who own about 30.72% of GIH's shares) over five years.  No doubt KFH's shareholding interest was a major  positive factor in achieving the rescheduling agreement.  This amount is substantially all of the non foreign debt of the Company - whose total bank debt as of 30 June 2010 was KD56.8 million.  It's unclear at that point just how much foreign debt remained. In May if I remember they were reported to have KD13 million of foreign debt.

With respect to 2010 financial performance, GIH reported 1H10 losses of KD1.9 million roughly half of 1H09's KD3.8 million, though it should be noted that for the full year of 2009, GIH's losses were KD20.5 million. 

KFH's support provides a nice safety net for GIH's future which Mr. Al-Ali sees as bright.

Aref Investment Company - 1H10 Losses of KD21.4 Million

Aref Investment Group reported its 1H10 financial results on the KSE this morning.  As usual, the announcement is in Arabic only (text below).  With the provision of this report, the KSE will allow the resumption of trading of AIG's shares.

1H10 losses KD21.4 million versus KD38million for the comparable period the year before.  The KD206 million amount for shareholders' equity includes minority interests of some KD37 or so million.

As I've noted before KFH owns some 53% of AIG and is providing support to weather the current crisis.  Earlier posts can be accessed using the tag "Aref".

[10:27:46]  بلغت (خسارة)(عارف) (21.4) مليون د.ك لل6 أشهر المنتهية في 30-06-2010‏
يعلن سوق الكويت للأوراق المالية أن شركة عارف الاستثمارية (عارف)‏
حصلت على موافقة بنك الكويت المركزي على بياناتها المالية المرحلية للفترة ‏
المنتهية في 30-06-2010، يوم الاثنين الموافق 30-08-2010 ،
وفقا لما يلي:‏
البند     ال3 أشهر المنتهية في 30-06-10     ال6 أشهر المنتهية في 30-06-10‏
الربح (خسارة)(د.ك)             (16.954.474)            (21.418.959) ‏
ربحية(خسارة)السهم (فلس كويتي)     (16)                         (20) ‏
اجمالي الموجودات المتداولة                                   299.743.103‏
اجمالي الموجودات                                            661.056.688‏
اجمالي المطلوبات المتداولة                                   392.279.750‏
اجمالي المطلوبات                                             452.963.950‏
ِ اجمالي حقوق المساهمين                                     208.092.738‏
بلغ اجمالي الايرادات من التعاملات مع الاطراف ذات الصلة مبلغ 680.466 د.ك
بلغ اجمالي المصروفات من التعاملات مع الاطراف ذات الصلة مبلغ 7.859.169 د.ك
الفترات المقارنة:‏
البند     ال3 أشهر المنتهية في 30-06-09     ال6 أشهر المنتهية في 30-06-09‏
الربح (خسارة)(د.ك)            (20.470.712)           (38.020.436)‏
ربحية(خسارة)السهم (فلس كويتي)     (19)                       (36)‏
اجمالي الموجودات المتداولة                                  311.066.999‏
اجمالي الموجودات                                           657.443.445‏
اجمالي المطلوبات المتداولة                                  333.757.640‏
اجمالي المطلوبات                                            450.767.484‏
ِ اجمالي حقوق المساهمين                                    206.675.961‏
وعليه سوف تعاد الشركة الى التداول اليون الثلاثاء الموافق 31-08-2010‏ 

AlFarabi Investment Company Planning to Enter Under Financial Stability Law

Yesterday Al Watan published an article stating that Al Farabi had received agreement in principle from the Central Bank of Kuwait to enter under the protection of the Financial Stability Law.

Today AlWatan published an article in which AlFarabi's GM confirms the news.  But denies being the source of the leak as the Company's intention is to wait until the upcoming shareholders' general meeting.

AF is primarily Kuwaiti owned by financial institutions KFH and  Industrial Bank of Kuwait and corporate groups.  From Kuwait:  Al Mousherji, Al Sayer, Hasibat Groups of Kuwait and the Olayan Group of Saudi Arabia.   It states it conducts its business according to the Shari'ah.

It is a private equity, direct investment firm which is probably best known for winning the privatization of the lube oil blending plant from KNPC.  The lube oil venture is separately capitalized from AF.

Aayan Leasing and Investment - Financial Stability Law is the Last Refuge

Muhammad Shabaan at AlQabas has an article in the 12 July issue with the headline:  "Aayan:  FSL the Last Refuge."  Which I suppose is perhaps an apt update of Samuel Johnson's April 1775 aphorism - at least in this case.

The article quotes financial sources that the Company is considering resorting to the FSL as it has been unable to reach agreement with its creditors.  Negotiations began over two years ago with the lead bank (KFH, I think), then morphed into multilateral negotiations.  No real progress has been made.  The Company has reportedly stopped servicing its debts.

Some lenders are planning to provision 50% of their outstandings - which is given as evidence that not much more progress is expected.  And which is it suggested will make progress more difficult. 

The article closes by noting that changes in the executive suite will be forthcoming.

It also repeats market talk that Aayan's 2009 financials submitted to the Central Bank some time ago (not specified how long) show a KD40 million loss.  And that the CBK and ALI have not yet been able to agree on the numbers.

If this is true and note that all we have is a market rumor, then ALI's 2009 FYE equity is probably around KD59 million.  That's derived in case you wonder from 3Q09's KD71 million plus and additional KD12 million in losses for 4Q09.

I'm going to go out on a limb here.  I suspect that's because CBK thinks the loss and any asset writedowns should be larger rather than smaller.  Though we did have one Islamic bank state earlier today that it had taken the option of increasing provisions to enhance its financial position.  Maybe the CBK is unlike the Central Bank of Bahrain not open to such moves.  (In case you're wondering, in a radical departure from most comments you read here, that comment is made with tongue firmly in cheek).

Gulf Investment House - KFH Finalizing Restructuring

Quoting informed sources at KFH (a 30.72% shareholder), Issa Abdul Salaam at AlQabas reports that KFH is on the verge of concluding the restructuring of GIH's debts.  The Company has reportedly had success in negotiations following a repayment of part of its past due obligations and is expected to convert short term loans to long term.

Aayan Leasing and Investment - Restructuring Update

AlWatan reports that despite marathon meetings with local creditors last week in which Aayan reportedly agreed to all the demands by its local lending banks, including the unnamed "Lead Bank" (which I believe is Kuwait Finance House), no real progress was made.  ALI supposedly agreed to priority of payment, a clear mechanism for guarantees and collateral, and payment schedules for each bank, subject to the approvals of foreign lenders - whose portion of the debt does not exceed 25% according to the article.

The last financials I saw for ALI - 3Q09 - had debt at roughly KD416 million.

The article notes that the Lead Bank also discussed with ALI increasing its ownership.  If you look at the KSE website, you won't see any banks listed as shareholders.   If I remember correctly, KFH disclosed that it indirectly owned some 16% of ALI in its FYE2009 report.

Perhaps, one of my readers out there can explain why AlWatan didn't mention the Lead Bank's name.  Is that because it's so widely known, no mention is required?  Or is it out of a delicate sensibility not to finger KFH has having a large share in this exposure?

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. 

Aref Investment Company Putting Final Touches on Restructuring Plan Lauds KFH's Help

AlWatan quotes Ibrahim AlKhazzam, Managing Director, of AIG that they are putting the final touches on their restructuring plan.  As envisioned AIG will make its first principal repayment 18 months from signing to give the company sufficient time to recover and implement its restructuring.  The plan is to restructure both liabilities and assets (AIG is a significant creditor as well as a debtor).

He noted that liabilities were only 1.9x equity - what he described as a low ratio.  Asset values were increasing.  He cited a particularly bright future for Aref Energy - with more than KD30 million in cash and no debts - ready to participate in the Government's Five Year Development Plan.

He expects to finish the restructuring in two months - noting that international consulting firms were helping in the process.

As I noted in an earlier post, KFH owns 53% of AIG and to the extent that it puts its financial and market muscle behind AIG, the company should be able to move forward.

Mr. AlKhazzam outlines in this article just how much KFH has done.  

First, there was the KD132 million loan extended so that AIG could pay off foreign creditors and investment funds - greatly reducing the complexity of negotiations by eliminating a potentially troublesome set of creditors.  And as well demonstrating a very strong vote of confidence by KFH.

What was news to me was that KFH has been not only supporting AIG but its associated companies.  Specifically named were Munshaat Real Estate Projects (25% ownership by AIG.  KSE Stock #433), Aref Energy Holding (72%, KSE #627), Sukuk Holding (49%, KSE #239).  He mentioned that KFH's 100% subsidiary Liquidity Management House was helping AIG negotiate with lenders.

Aref Investment Company KD127 Million in 2009 Losses Restructuring Ahead

AlQabas reports that reported Fiscal Year 2009 losses of some KD127 million (which is roughly KD20 million more than Aref's paid in capital).

The latest financials on the KSE are 30 September 2009.  At that point it had KD57 million in losses for the year.  Adding another KD70 million takes shareholders' equity to roughly KD175 million as opposed to KD304 million at fiscal year end 2008.  There are sufficient reserves to offset the losses and thus eliminate the legal problem of retained losses exceeding a substantial amount of paid in capital.  The possibility of a capital increase is also mentioned.

More troublesome for the company is the fact that current assets are only KD41.7 million versus current liabilities of KD347.6 million.

Current management is said to be working hard to clean the books. To draw a line between the old board and the new so that responsibility can be established.

KFH is credited with helping solve the problem of foreign debts by lending KD130 million.  Local debts (before the KFH loan) were reported at some KD73 million.  It should be noted that KFH owns some 53% of Aref. 

With KFH behind it and presuming that KFH is committed to using its financial resources to help, Aref should be able to work its way through the restructuring process.

Kuwaiti Banks to Sue Saad and AlGosaibi This May

Following up on an earlier story, AlQabas reports that the lawyers for four local banks (named earlier as Kuwait Finance House. Commercial Bank of Kuwait, Gulf Bank and Burgan Bank) are putting the finishing touches on the "files" (cases) which will be filed in London and Riyadh.  Apparently, some of the loans (which are described as being no less than US$1.5 billion) are subject to Saudi law!

According to the article, the motive for pursuing the cases in Court is that negotiations weren't fruitful.

The article also mentions the ongoing suit by AlAhli Bank of Kuwait against Saad in the New York Supreme Court.

Saudi Zain Foreign US$500 Million to US$600 Million Loan - What's Behind the News Item?

 

Kuwait's Al Anba'a newspaper reports that Zain is in discussions with non regional banks for a loan of between US$500 to US$600 million to finance the development and extension of the network of Saudi Zain in the Kingdom.  The reason for the recourse to foreign lenders is ascribed to "tight" lending conditions in the GCC.  You've probably seen all this reported elsewhere.

But, there's an element to the story that you haven't probably seen.

The "bit" that many news reports have left out is that the negotiations are being facilitated by equipment suppliers to Zain.  Most of whom are European.  And thus the assumption is that the banks involved are European.  

Does this indicate anything about Zain's financial condition?

As mentioned above, the ostensible reason for the recourse to foreign lenders is that local banks are imposing very complicated conditions and requirements for guarantees due to market conditions and due to tighter supervision by central banks.  The unspoken sub-theme is that the credit of Zain is sterling.  But that its access to financing has fallen afoul of external conditions.

No doubt lending conditions are tighter in the GCC.   Lots of distress with AlGosaibi, Saad, Dubai World has probably focused previously unfocused minds.

Unmentioned is the simple fact that Zain Saudi has not turned in stellar performance.  Also unmentioned is that it did not make the EBITDA earnings target covenants under its existing loan.  Or that existing lenders on that facility had to grant a waiver to remedy an event of default. 

Any foreign lender should exercise caution when it is told that the local banks don't understand the credit, aren't as sophisticated as the foreign bank, are over reacting  to market difficulties, or under pressure from allegedly strict regulators.  While it is nice to be told that one is smarter than others,  sometimes a "great" opportunity to take advantage of others' lack of sophistication and nerve is not so great after all.    

If a prospective lender also notices that the borrower needs to enlist help of others to secure financing, that may also suggest additional caution is prudent.  If the borrower cannot find any banks who "know" it who are willing to lend (and note the article says that negotiations with local banks for financing this new loan have stopped), then could be another red flag.  Having said this, once a firm I was with extended a financing offer to a prospect whose lead bank was unable to providing financing, though this was a skill set deficit not a credit issue.  We then became the lead bank.

Equipment suppliers have a keen interest in moving their merchandise.  And to the extent they can lock in a buyer to their equipment or increase "switching costs", all the better.  When their customers can't raise financing on their own, suppliers first turn to other sources of credit, e.g., export credit agencies, and financiers they know.  Often leaning on those sources to do the deal, explaining just how important it is to them and promising they won't forget.   Sometimes, as a last resort, they will even take the receivables on their own books.  During the "Asian Century" (which if I remember correctly began in the early 1990's and abruptly ended in 1997, though I believe it may have restarted again in 2009) one French and one US supplier found themselves later to their financial chagrin with a lot of duff receivables - which may in part have motivated a merger.

Another bit of information in the article which may be an indication of distress (though it need not necessarily be) is the statement attributed to the CEO of Zain Saudi, Saad AlBarak, that Saudi Zain was not "rescheduling" its existing murabaha loan but merely "refinancing" it.  

A refinancing certainly sounds much better than a rescheduling.  A rescheduling implies all sorts of problems.  A refinancing, well that's just the rollover of a great asset.  

The devil is as usual in the details.  If the existing lenders were to say "no",  is the alternative a rescheduling? Are there any new lenders ready to step up and "take out" some or all of the existing lenders?  Sometimes when a bank is stuck in a credit, it "refinances" rather than "reschedules" because reschedulings raise all sorts of  messy problems.  First, there is the need to report restructured loans under IFRS.   Auditors may insist on impairment tests.  Provisions may become necessary.  Second, as a general rule, Central Banks get nosy about rescheduled loans and start asking about provisions as well.  Third, equity analysts may form unfortunate conclusions if restructured loans increase.  Something one might want to avoid if one faces other loan problems.  Fourth, clients and depositors may get nervous.

And sometimes a refinancing is just that - bankers renewing a performing asset that they are happy to have on their books.

So, to be clear, all of the above do not prove there are serious problems at Saudi Zain.  

What they do suggest, however, is that a closer look at the company is warranted.

KFH Lawsuit Against Commercial Bank of Kuwait - Re Bank Boubyan Shares

AlQabas has an article on the above topic today.

Kuwait Finance House ("KFH") has filed suit to keep Commercial Bank of Kuwait ("CBK") from disposing of shares in Boubyan Bank that it acquired because of a failed "repo" agreement with The Investment Dar ("TID").

KFH which has KD 44 million of exposure to TID apparently is arguing that CBK should not be allowed to sell the shares but rather that these should be placed at the disposal of TID's creditors.  As I understand it (and note that caveat), KFH is arguing that CBK is just another creditor of  TID and should share the collateral with other lenders.  The amount involved is significant.  At the last closing price, some US$387.5 million.  If you'll recall the estimate of assets versus liabilities, the creditors believed there was likely to be a shortfall in TID's repayment.  So including these shares in  TID's "estate" would improve the overall payback rate roughly 9 to 10%.

In any case, as per the article, the High Court has transferred the case to the Experts Department.

Some background:

1. Boubyan Bank ("BB")  was formed in 2004 as an Islamic Bank.  
2. In December 2008 TID sold CBK its BB shares (19.16% of BB) with an option to repurchase.  In effect what appears to be a form of "repo".
3. Around this time NBK received approval from Kuwait Central Bank to purchase up to 40%  of BB.  NBK is interested in BB in order to expand its franchise into Islamic banking.  For those who don't know, NBK is the premier non Shari'ah bank in Kuwait and a very strong contender for that position throughout the Arab world.
4. In May 2009 CBK announced that TID had failed to buy back the shares within the agreed time frame. And therefore it was taking control of the shares.
5. June 14 NBK announced it had agreed to buy the shares from CBK. The price  was roughly $420 million.
   
6. On 16 June responding to a motion from TID,  the Kuwaiti Court stopped the sale pending determination of ownership.
   
7. In July/August 2009, KIA auctioned its 19.8% share in BB.  National Bank of Kuwait  won 13.2% and Securities Group 6.6%.  NBK previously held 14.3% or so.  After the auction, it held 27.5% of BB and was the largest shareholder. 
   
8. NBK acquired Securities Group's shares plus some additional shares.   It is now the largest single shareholder in BB with some 40%.   And at the limit of shares it may own without further approval from the Central Bank of Kuwait.
   

Kuwait Banks Disclose Exposure to Dubai

This won't be a big surprise to anyone out there familiar with GCC banking, but the Kuwaiti banking sector has little to no exposure to Dubai.

Let's run down the statements to date:

1. National Bank of Kuwait- No exposure to any company owned by Dubai Government.  NBK also pretty much avoided the Suq Al Manakh.  Abu Shukry was at the helm there then.
   
2. Boubyan Bank - No exposure to Dubai World or Nakheel.  
3. Kuwait Finance House KFH - No exposure to Dubai World or Nakheel. 
4. Ahli Bank of Kuwait - US$20 million in bonds.  No loans.
5. Kuwait International Bank - No exposure to any Dubai company which has announced a standstill.  This is the "old" Kuwait Real Estate Bank. 
6. Bank of Kuwait and the Middle East -  No exposure to Dubai World or Nakheel.
7. Burgan Bank - No exposure to Dubai World or Nakheel.

Not yet reporting Gulf Bank and Commercial Bank of Kuwait.

Also Arab African International Bank Egypt  - in which the Kuwait Investment Authority ("KIA") holds 49.4% or so - disclosed it had US$700 million in loans to companies in the UAE.

As a final word:  This doesn't mean that Kuwaiti banks don't have exposure to other entities or companies in the UAE including Kuwaiti companies and/or individual investors.

Kuwait Stock Exchange Warns 25 Companies of Potential De-Listing - Sign of Continued Financial Stress in Kuwait

The press reports that 12 November the KSE warned 25 companies that unless they provided  their 3Q09 financial statements by this coming Monday it would suspend trading in their shares.    Earlier this year in May, the KSE gave just such a warning and suspended firms - many of whom are from the distressed "investment firm" sector.  Suspension is lifted when the financials are provided.

The key takeaway from this announcement is that serious distress in the financial sector continues.

Current data on the KSE website differs from the press accounts  Perhaps, an earlier KSE statement was amended.  The latest KSE statement (Arabic only) is here.  (Note:  This news page will be updated on  the next trading day (Sunday) and so after then this link won't be valid).

In the latest statement the KSE's warning is to only 23 firms. 

First, you're probably asking yourself about the discrepancy.  The press reports say 25.  Suq Al Mal  says 23.  I presume the difference are the two firms the KSE suspended this morning:  IFA (investment firm) and Watha'iq (insurance company).  The KSE also suspended the trading of Commercial International Bank Egypt.  As noted above, all three stocks are suspended until the provision of their 3Q09 financial reports.

Second, 6 of the 23 firms are already suspended.  These are probably the stragglers from the 26 the KSE suspended last May. So the potential incremental trading suspensions  are 17 not 23.

Third, let's look at the data a bit closer to see what conclusions we might draw from it  Industry categories are per KSE definitions. The first number followed by a "W" is the number warned.  The second number followed by an "S" are those already suspended:

1. Banks:                       2W 0S
2. Investment Firms:   11W 2S
3. Real Estate:              2W 2S
4. Industrial Firms:       3W 2S
5. Service Firms:          4W 0S
6. Parallel Market:        1W 0S

As noted above the presence on the list of two banks and 11 investment firms (there are 46 investment firms listed on the KSE) indicates the serious distress in the Kuwaiti financial sector  continues  The investment firms have been particularly hard hit losing something on the order of KD 9 billion (US$31.5 billion).  And are currently locked in difficult negotiations with the local banks over debt restructurings as well as the provision of new finance.  Here's a recent article from AlQabas about an upcoming meeting called by the Association of Investment Companies with the Association of Kuwaiti Banks to discuss those two topics.  It's titled "Crisis in Financing (to be discussed) in Meeting between Association of Banks and Investment Companies".

Fourth, the financial statements of all banks and investment firms licensed by the Central Bank of Kuwait ("CBK") are subject to its approval prior to release.  This gives the CBK considerable leverage over these firms.  It can demand changes in the financials.  And it can use the approval process to press for a firm's acquiescence to other of its requests.

Fifth, let's look at the three names on the list which were mentioned in the press accounts:  Commercial Bank of Kuwait, Burgan Bank and Aref (Investment Firm).

One possible interpretation of the delay is that discussions are ongoing between the CBK and these two banks over the level of their provisions (the most likely sticking point between banks and the CBK) and/or as a way of encouraging them to commit to raise new capital.

The inclusion of Aref is a bit of a surprise.  In late September Kuwait Finance House (KFH)  - a 52% or so shareholder in Aref - announced that it was providing facilities so that Aref could reschedule some KD 132 in liabilities.  So Aref should be well placed to finalize its 3Q09 report.  Not clear why they have not.