Despite its healthy oil revenues, Kuwait’s economy was hit hard by the global financial crisis and it suffered the worst recession of all the Gulf countries in 2009. The Kuwaiti authorities were forced to guarantee all deposits at local banks in 2008 after Gulf Bank made headlines in October that year when it was hit by steep derivatives trading losses amounting to Kd375m ($1.35m), before being rescued by the central bank, which subsequently halted Gulf Bank's trading operations.
Kuwait also became synonymous with high-profile losses and defaults at its investment companies. Global Investment House, Kuwait’s largest investment bank, defaulted on $2.8bn of debt, while The Investment Dar (TID) became the first Gulf company to default on an Islamic bond in May 2009 when it missed a payment on $100m of debt. TID had Kd1.08bn of total debt outstanding as of September 2008. In total, the investment sector hemorrhaged more than $2bn in 2009, following a loss of upwards of $3bn in 2008.
