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Tue 23 Dec 2008 03:44 PM

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NBK gets approval to buy stake in Boubyan

Kuwait's largest bank by assets secures central bank approval to buy up to 40% in Islamic lender.

National Bank of Kuwait (NKB), the country's largest bank by assets, said on Tuesday it has secured central bank approval to buy up to 40 percent in Islamic lender 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.

In March, NBK said it plans to set up an Islamic lender in Switzerland aimed at Gulf investors as it has been expending outside its home market.

Investment Dar, the Islamic firm which owns half of British luxury car maker Aston Martin, said last week it has sold a 19 percent stake in Boubyan to Commercial Bank of Kuwait as it seeks financing.

Under the deal, Dar said it had the right to buy back the stake.

Daily Al-Rai on Sunday quoted a source at CBK as saying the bank is ready to sell a stake in Boubyan back to Investment Dar or to any other party.

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 NBK gained 8.33 percent on Tuesday, while Boubyan closed up 7.25 percent.

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