Kuwait's NBK offers $2.1bn for Boubyan stake

National Bank of Kuwait looks to increase holding to boost Islamic banking presence
Kuwait's NBK offers $2.1bn for Boubyan stake
National Bank of Kuwait
By Reuters
Fri 15 Jun 2012 09:46 AM

National Bank of Kuwait, the country's largest lender, has offered KD581m ($2.1bn) for the 52.7 percent of Boubyan Bank it does not already own, to boost its presence in Islamic banking across the Gulf region.

NBK, which owns a 47.29 percent stake in the Islamic lender, said on Thursday it was offering 630 fils per share for the rest. Boubyan shares closed at 600 fils on Wednesday. Trading in Boubyan shares was halted on Thursday.

"The offer will be financed using the internal cash of the bank. NBK will pay for the shares by cash," it said.

The offer letter was sent to the Kuwaiti bourse and will be sent to Boubyan on June 18, NBK said.

The proposed deal will give NBK a stronger position in the competitive Islamic banking market across the Gulf region. If the tie-up is completed, the combined entity would hold assets worth about $57bn.

While there have long been calls for consolidation in the Gulf banking sector, mergers are not common because main shareholders - often powerful local families - are reluctant to cede control and often want unrealistic valuations.

NBK has been building its Islamic banking business. In April 2011, it boosted its position in sharia-compliant Boubyan which competes with Kuwait Finance House and Kuwait International Bank.

The bank, which ranks among the top regional lenders in terms of assets and profits, said in April it had received central bank approval to increase its stake in Boubyan Bank to 60 percent from 47.29 percent.

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