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Sunday, June 21, 2009

NBK raises Boubyan Bank stake

by Rania El Gamal
National Bank of Kuwait (NBK) raised its stake in Boubyan Bank to more than 12 percent, becoming the third-largest shareholder in the Islamic lender to help boost its Sharia-compliant business.

NBK, the country's biggest bank by assets, increased its stake to 12.43 percent from 10.16 percent, according to data on the Kuwait Stock Exchange on Thursday.

Islamic banking is one of the world's fastest growing financial sectors, rising 15-20 percent a year, according to industry estimates.
Kuwait Investment Authority, the country's sovereign wealth fund, is the largest shareholder in Boubyan with a 20 percent stake while Commercial Bank of Kuwait (CBK) owns 19.19 percent, the data showed.

"We've been buying those shares through the Kuwaiti bourse," a spokesman for NBK said.

NBK has said it has central bank approval to buy up to 40 percent in Boubyan. The current approval period ends on June 21, according to a previous statement by NBK. It was not immediately clear if this approval could be renewed.

On Sunday, NBK said it reached a deal with CBK to buy its stake of about 19 percent in the Islamic lender for around KD120 million ($417 million) as it wants to tap growth in Islamic banking.

But the deal was halted after Investment Dar said it had won a court ruling against CBK to suspend the sale of Boubyan shares.

Dar, the Islamic finance firm that owns half of British luxury car maker Aston Martin, filed a complaint last month against CBK over a 19.2 percent 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.

A Kuwaiti court has suspended selling any shares in Boubyan currently under CBK's name until it settles the dispute between CBK and Investment Dar and rules in another lawsuit, for which the hearing is set for September 9.

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 of its board members stepping down without giving a reason.

Source : Reuters

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