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Mon 22 Jun 2009 08:48 PM

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Kuwait's KIA to auction stake in Boubyan

UPDATE 1: Sovereign wealth fund looking to offload 20% stake via public auction in July. 

Kuwait's KIA to auction stake in Boubyan
OFFLOADING STAKE: KIA set to sell stake, via public auction, in Islamic lender, Boubyan. (Getty Images)

Kuwait Investment Authority (KIA), the Gulf state's sovereign wealth fund, will offer its stake in Islamic lender Boubyan Bank in a public auction in July, a state-controlled firm said on Monday.KIA has set a minimum price of 550 fils ($1.91) per share for the auction on July 22, Kuwait Investment Co (KIC), a unit of KIA, said in a statement obtained by Reuters on Monday.

KIA is the largest shareholder in Boubyan with a 20 percent stake, according to bourse data.

National Bank of Kuwait (NBK), the third-largest shareholder in Boubyan, has raised its stake in Boubyan Bank to 13.85 percent to help boost the Islamic lender's sharia-compliant business, bourse data showed on Monday.

NBK, the country's biggest bank by assets, said earlier it had central bank approval to buy up to 40 percent in Boubyan. The current approval period ended on June 21, according to a previous statement by NBK.

Local newspaper al-Watan reported on Monday that NBK was likely to seek a renewal of the central bank's approval.

Boubyan has been in the middle of a row in recent weeks with both Commercial Bank of Kuwait and Investment Dar disputing their right to own a 19.2 percent stake.

Dar, the Islamic finance firm that owns half of British luxury car maker Aston Martin, won a court ruling last week against CBK to suspend the sale of Boubyan shares after NBK said it reached a deal to buy the latter's stake in Boubyan.

Dar sold the stake to CBK in December with the right to buy it back, as it sought financing and to restructure its debt. But CBK has since said that Dar and its related firms have lost their right to buy back the stake.

Boubyan Bank, which complies with Islam's ban on interest, competes with larger rival Kuwait Finance House and Kuwait International Bank.

In February, Boubyan faced a wave of resignations with all board members stepping down without giving a reason.  (Reuters)

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