Kuwait saves bank, Saudi extends credit as crisis bites

By Ulf Laessing

KUWAIT (Reuters) - Kuwait moved to prop up one of its banks and Saudi Arabia extended $2.7 billion in credit to needy citizens on Sunday as the global financial crisis spread to the Gulf Arab region, sending stocks into a tailspin.

The Kuwait central bank was forced to step in to support Gulf Bank, which was hit by derivatives trading losses, prompting the government to announce it would guarantee deposits at local banks.

Saudi Arabia unveiled plans to deposit 10 billion riyals ($2.67 billion) into the Saudi Credit Bank, which was established to extend interest-free loans to low-income citizens to help them overcome financial difficulties.

The actions lit a fuse to simmering investor concerns about the impact of the global credit crunch on the region.

Gulf markets tumbled to multi-month lows on Sunday. Both the Qatar and Oman indices fell more than 8 percent, while Dubai sank 5.53 percent and Saudi Arabia's index slipped 1.83 percent after an 8.7 percent slide on Saturday.

The losses followed those on global markets on Friday as investors dumped risky assets.

"WORRIED ABOUT MONEY"

The latest moves by Kuwait and Saudi Arabia come after an emergency meeting of Gulf finance ministers and central bankers in the Saudi capital on Saturday, which was aimed at better coordinating the region's response to the global downturn.