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Press Release

Various Kuwaiti Banks Placed On CreditWatch Negative On Large Exposure To Investment Companies

LONDON (Standard & Poor's) Feb. 16, 2009--Standard & Poor's Ratings Services said today that it placed its 'A-' long-term counterparty credit ratings on Kuwait Finance House and Commercial Bank of Kuwait on CreditWatch with negative implications. At the same time, the 'A-2' short-term counterparty credit ratings on these banks were affirmed. Furthermore, Standard & Poor's placed its 'BBB+/A-2' long- and short-term counterparty credit ratings on Al Ahli Bank of Kuwait and Burgan Bank on CreditWatch with negative implications. At the same time, Standard & Poor's commented on its CreditWatch placement of Kuwait-based Gulf Bank. The 'A-/A-2' long- and short-term counterparty credit ratings on Gulf Bank remain on CreditWatch with negative implications, where they had been placed on Oct. 27, 2008.

"The various rating actions reflect our expectation that the exposure of these five banks to the distressed local investment companies sector is likely to materially affect their stand-alone credit profile, in the context of an already weakening operating environment," said Standard & Poor's credit analyst Emmanuel Volland.

We understand that the government is currently reviewing a support package to the investment companies that would have a significant impact if approved and executed, and would influence the stand-alone credit profile of these banks. We believe that a large number of investment companies in Kuwait, largely active in the real estate and stock markets, are facing major liquidity, and perhaps solvency, problems and have started discussions with some of their creditors to restructure their debt obligations.

To resolve the CreditWatch placement, Standard & Poor's will analyze the individual banks' detailed exposures to the investment companies (on a gross and net basis) and assess the expected impact on their stand-alone credit profile. "We also need to analyze and assess the impact of the government's support package and measure the extent to which it mitigates risks. Lastly, additional important factors we will take into account are the extent of the local economy slowdown and its impact on banks' asset quality and financial performance," added Mr. Volland.

We expect to reassess the CreditWatch status in the coming weeks or months following consideration of the above factors. In our opinion, we do not anticipate the ratings on these five banks to be downgraded by more than one or two notches, assuming that significant government support will materialize.