DUBAI, United Arab Emirates (AP) -- Kuwait's sovereign wealth fund said Sunday that it has no plans to sell stakes in Citigroup Inc. and Merrill Lynch & Co. because it has faith in the potential of the U.S. banks.
"The authority has no intention of selling its holdings in Merrill Lynch or Citigroup in the near term, since the authority's investment policies are based on a long-term vision," the Kuwait Investment Authority said in a statement published in local newspapers al-Rai and al-Qabas. The comments were attributed to both the fund itself and to Finance Minister Mostafa al-Shimali.
The KIA pumped $5 billion into the two banking giants in January 2008 just as the financial crisis was gathering steam. Some Kuwaiti members of parliament criticized the deals when their value later tumbled.
Sunday's comments were in response to questions from lawmaker Walid al-Tabtabai.
While noting that it is capable of selling its holdings in the two companies if it chooses to, the fund said it nonetheless remains committed to its investments for now.
"Despite the sharp decline in international share prices, we think the crisis will pass with time because central banks are working to deal with it," according to the reports. "We think the investments in these two companies is a good investment in the long-run."
Phone calls to the fund seeking additional comment went unanswered Sunday.
The KIA invested $3 billion in Citigroup and $2 billion in Merrill Lynch when they needed cash following losses stemming from the credit crisis.
Merrill was later bought by Bank of America Corp., making the KIA a big shareholder in that company.
The Kuwaiti fund described the combined firm as "an unrivaled company in its outreach and financial services," and said that it received about nine-tenths of a Bank of America share for each Merrill share it held.
OPEC member Kuwait rarely releases details about its foreign investments. In February, al-Tabtabai said the KIA lost 9 billion dinars ($30.73 billion) from March to December last year.
Rachel Ziemba, an analyst at RGE Monitor who tracks sovereign wealth funds, estimates Gulf Arab funds and central bank holdings tumbled to a 2009 low of $1.10 trillion in February from a peak of $1.37 trillion August 2008 as a result of the financial meltdown.
An influx of fresh oil profits and a rebound in the stock market have pushed the Gulf's foreign holdings up to $1.24 trillion through August, she estimates.
Associated Press Writer Sarah el-Deeb contributed reporting from Cairo.
6/9/2009
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