BKME bought 83.3 million shares in AUB from Commercial Bank of Kuwait (CBK) in a $25.8 million transaction on 10 December, in one of the biggest single trades seen on the Bahrain Stock Exchange.
CBK is the second Kuwaiti bank to sell its shares in AUB. Almost a year ago to the day, The Gulf Banksold a $47.6 million, or 12 per cent, position (MEED 22:12:00). Both CBK and The Gulf Bank had shareholdings in AUB through their part-ownership of London-based United Bank of Kuwait(UBK), a joint venture bank set up in 1966. These positions were diluted by last year’s merger between UBK and Bahrain-based Al-Ahli Commercial Bank, which produced AUB (11:8:00).
The acquisition by BKME of AUB stock will reinforce the already close ties between the two banks. In February, AUB bought a 15 per cent stake in the Kuwaiti bank for $133 million and it is understood that this position has been increased to 20 per cent through open market trading (MEED 30:3:01).
Adel el-Labban, AUB’s chief executive, has made no secret of AUB’s aim of acquiring a controlling stake in BKME. AUB is now the second-largest shareholder. The government of Kuwait holds a 58 per cent stake and the state pension fund an 11 per cent stake. The Kuwaiti government has stated that it intends to privatise its position.
The strengthening relationship between AUB and BKME is in line with the former’s regional expansion strategy. Its position in the Bahraini market was boosted by the summer acquisition of Commercial Bank of Bahrain, and it remains focused on establishing operations in other GCC markets.
The overwhelming success of AUB’s rights issue staged in July will have strengthened its hand: paid-in capital was increased to $450 million from $324 million (MEED 20:7:01).