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Tue 23 Dec 2008 05:36 PM

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CBK cancels deal to buy Boubyan stake

Commercial Bank of Kuwait says it is stepping away from taking shares in bank from Investment Dar.

Commercial Bank of Kuwait (CBK) said on Tuesday it has cancelled a deal to buy a stake in Boubyan Bank from Investment Dar."The Commercial Bank of Kuwait has agreed with Investment Dar to start procedures to cancel the deal of buying... Boubyan shares," CBK said in a statement, without elaborating.

Last week, Investment Dar said it had sold a 19 percent stake in Islamic lender Boubyan to CBK but retained the right to buy back the shares as it seeks financing.

The news came after National Bank of Kuwait, the country's largest bank by assets, said on Tuesday it has secured central bank approval to buy up to 40 percent in Boubyan Bank.

The three-month approval period started on Dec. 22, NBK said in a statement, adding that it was yet to start talks with Boubyan for a stake.

"This is an initial approval, we did not start official talks with Boubyan yet," an NBK spokesman said, declining to comment further.

Sovereign wealth fund Kuwait Investment Authority (KIA) is Boubyan's largest shareholder owning a 20 percent stake, bourse data showed.

Boubyan Bank, which complies with Islam's ban on the payment or receipt of interest, is competing with larger rival Kuwait Finance House and Kuwait International Bank.

The Bank of Kuwait and the Middle East won the central bank's approval in June to transform into an Islamic lender.

Shares of CBK closed 3.39 percent up on Tuesday, NBK gained 8.33 percent, while Boubyan was up 7.25 percent. (Reuters)

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