October 28, 2008	Tuesday	Shawwal 28, 1429

KUWAIT CITY, Oct 27: The Kuwait government has assured people that it would guarantee deposits at banks after the central bank was forced to save the Gulf Bank from derivatives losses.

The government has also set up a special task force, headed by the central bank governor, to deal with the impact of the financial crisis.

Banking shares dived, while Kuwait’s fifth largest bank by market value sought to assure anxious clients their deposits were safe after the bank halted trading in Gulf Bank.

The bank ran into problems after some of its clients refused to cover losses from currency derivatives trades.

“The loss this bank will suffer as a result... will not have a substantial impact on the financial status of the bank, will not affect its capability to continue its activities and was no reason to worry at all,” the central bank said in a statement.

The losses had resulted from trading in derivatives — an instrument in which investors bet on future prices — after a fall of the euro against the dollar.

The Gulf Bank said on Monday its business was functioning normally and it had seen no major withdrawals by clients after it had to seek help to plug derivatives losses, but trading in bank’s shares remains suspended pending an investigation.