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Sun 10 Jan 2010 12:24 PM

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Kuwait's Burgen Bank increases stake in Iraqi lender

Lender now majority shareholder in Bank of Baghdad after buying additional stake.

Kuwait's Burgan Bank said it became a majority shareholder in an Iraqi lender as part of its plan to become a regional player.

Burgan, the commercial banking arm of investment firm Kuwait Project Co (KIPCO), now owns a 50.6 percent stake in the Bank of Baghdad after it bought an additional 5.3 percent stake for $10.7m, it said on Sunday in a statement on the Kuwaiti bourse website.

The acquisition is part of a push by Burgan to move outside of its home market for the first time.

Several Kuwaiti lenders such as National Bank of Kuwait and Commercial Bank of Kuwait have been expanding abroad to offset rising competition at home where foreign players have entered the fray.

In 2008, Burgan agreed to purchase the foreign assets of Bahrain's United Gulf Bank, another unit of KIPCO, for 194 million dinars ($675.5m).

This gave Burgan stakes in the Bank of Baghdad, Algeria Gulf Bank, Jordan Kuwait Bank and Tunis International Bank.

Burgan, which was founded in 1977 and is mainly active in Kuwait, said last year it would relaunch plans to increase capital by 200 million dinars as a way to fund the purchase.

The bank said in December it received central bank approval to raise its capital by 36 million dinars.

Burgan's shares were down 1.45 percent by 0734 GMT. (Reuters)

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