Kuwait, UAE firms team to tap banking sector

Kuwait's Global Investment House and UAE investment firm Al-Qudra Holding said on Monday they planned to set up an investment bank in Abu Dhabi to tap growth in the second-largest Arab economy.

Shares in Global, Kuwait's biggest listed investment bank, jumped 5% after news of the new foray, which comes a day after the firm said it would raise 270 million dinars ($989 million) by selling shares to foreigners to fund expansion.

"We're setting up a bank, this is not an acquisition," said Sunny Bhatia, Global's chief financial officer (CFO), declining to give details on the value of the deal.

Banks across the world's top oil-exporting region have been expanding abroad as competition in the home markets intensifies and they seek to capitalise on an economic boom fuelled by a near five-fold increase in oil prices since 2002.

"There are lots of opportunities for such a bank in the UAE and we also see opportunities in the region," Al-Qudra Chairman Salah Salem Al-Shamsi told Reuters.

Global would take the lead in setting up the investment bank, which is awaiting regulatory approvals in the UAE, and Al-Qudra would be a co-investor, Al-Shamsi said, declining to give further details.

Global plans to start operations in Saudi Arabia, the world's biggest oil exporter, by the end of June and in Qatar within a year. It is also considering acquisitions, Bhatia said on Sunday.

Shares of Global jumped 5.56% on Monday, extending gains this month to more than 15%.

"Expansion outside of Kuwait is a positive sign that will boost Global's future profits," said Abdulmohsen Al-Bahar, director of Gulf Arab asset management at Kuwait-based Noor Financial Investment Company.

"The news is positive because it will, in the long term, reflect on the shares."

Al-Qudra, which has 30 units operating in real estate, transport and infrastructure, said in October it would sell shares in an initial public offering (IPO) in the first quarter.

Global said on Sunday it planned a 35% capital increase by selling shares to foreign investors in Europe, Asia and the Gulf.

Last month, Global's joint venture with Gulf Pharmaceuticals Industries (Julphar) bought the UAE drug firm's distribution arm as part of plans to build a chain of drug stories across the Middle East and North Africa. (Reuters)