Gulf Bank not seeking merger

Kuwait's Gulf Bank is not seeking a merger for the time being as major shareholders support the troubled bank and its emergency rights issue, its chairman said in remarks published on Sunday.

The lender is seeking to raise 375 million dinars ($1.37 billion) after the Gulf Arab state had to save its fifth-largest lender by market value following losses with derivatives worth the same amount, triggering a departure of its board.

Gulf Bank's new chairman Kutayba Al-Ghanim told Al-Rai daily that merging with another bank was not a priority until a restructuring ordered by the central bank was over.

"The issue does currently not present itself. I don't think it will become an issue to look into as long as we're working on a revamp," he told the paper when asked whether Gulf Bank had got any offers by other lenders to merge.

Kuwaiti investment firm Noor Financial Investment Co. said last week it represented two foreign institutions mulling to buy up to 51 percent of Gulf Bank. It did not identify the suitors.

But Al-Ghanim, who said in October the bank was considering a merger, said a stake sale would not make much sense given the low valuations expected in the wake of the global financial crisis.

"We focus on the bank's operational business and a sale is an issue we don't currently don't think about," he said.

Al-Ghanim said he expected a high subscription rate for the emergency capital increase as major shareholders were backing the bank which is only active in Kuwait.

"Of course, we are optimistic," he said.

He added the bank, which holds an extraordinary shareholder meeting on Dec. 2, expects to get proceeds from the emergency rights issue by year-end. (Reuters)

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