The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site.

All material subject to strictly enforced copyright laws. © 2021 Euromoney, a part of the Euromoney Institutional Investor PLC.

Confidence returns to Kuwait

Governor Sheikh Salem Al Sabah is leading efforts to deal with the chaos left from years of property and stock speculation. But as Dominic O’Neill asks at the central bank’s office in Kuwait, is the clean-up anywhere near complete? Is structural change possible?

AFTER 25 MONTHS without a break, Kuwait central bank governor Sheikh Salem Al Sabah took a much-needed holiday in July. Perhaps it is a sign that banks in Kuwait are regaining confidence.

In the past two years a large chunk of Kuwait’s financial system has disintegrated. In a way, it was a re-run of the country’s Souk Al Manakh crisis in 1982: an immense stock market bubble that burst, leaving many banks insolvent. This time it was a number of Kuwait’s 100 investment companies that found themselves in trouble. And according to credit rating agency Moody’s the problem is not resolved: some investment companies have restructured but the standing of others relies on continued support from local banks.

With on- and off-balance-sheet assets, according to the IMF, having risen to more than 90% of the banking system’s total assets, collectively the companies constitute a system the governor refers to as "shadow banking". The firms are often aligned with business families loth to concede defeat in this tight-knit community. The chief executive of one financial firm says: "Without strong leadership, the banks will keep quiet. No one will be forcing anyone out of business."

According to IMF estimates, Kuwaiti investment companies’ debt amounted to about $30 billion at the end of 2009.

You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.


Unlimited access to and

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually


Unlimited access to and, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors


Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree