First National Bank of Chicago confirmed reports Thursday that it has filed suit against the central bank of Kuwait and a large foreign exchange firm in that country seeking to recover $7.5 million that the Chicago bank had lent to the currency trading firm.
American Express Bank Ltd. and Marine Midland Bank said they also filed suits over loans to Jawad and Hyder Y. Abulhasan, Kuwait`s second largest foreign exchange house.
A spokesman for First National said the suit was filed by the bank`s London branch, but he declined to say whether its parent, First Chicago Corp., already had charged off the loans in question.
Kuwait`s central bank was named as a party in the First National suit, he said, because it now controls Abulhasan`s assets.
The American Express suit, which was filed in June, named the currency firm as defendant, but not the central bank, according to a spokesman, who refused to comment further. A Marine Midland official also confirmed that his bank had filed a suit, but wouldn`t give further details.
Al-Qabas, a Kuwaiti newspaper, said American Express and Marine Midland are seeking to recover $3 million each from the firm.
The suits grew out of the 1982 collapse of Kuwait`s unofficial stock market, called the Souk al-Manakh, which reportedly left speculators with billions of dollars in debts. The stock market`s bubble burst when the Iran-Iraq war flared up less than 100 miles away.
Finance Minister Jassim al-Khorafi said in May the central bank had supervised and provided half of a $50 million rescue loan to Abulhasan. Local bank creditors arranged a rescheduling deal to cover the rest.
The First National suit is seeking the release of collateral that Abulhasan gave to the central bank, but the spokesman refused to say what the collateral was.
