Kuwaiti bank spins off stake to a subsidiary of its parent Kipco
Kuwaits Burgan Bank is selling its controlling stake in Jordan Kuwait Bank to a subsidiary of its parent firm Kuwait Projects Company (Kipco).
The deal is part of Burgan Banks efforts to increase its capital ahead of the introduction of the Basel III global finance rules, the lender yesterday said in a statement.
The sale yields a reduction of over KD500m (($1.65bn) in Burgans risk-weighted assets and will boost the banks capital adequacy ratio (CAR), which it estimates to be in excess of 15 per cent at the end of 2015, according to the statement.
Burgan did not say which of the Kipco subsidiaries is acquiring its stake in the Jordanian lender. Kipco is one of Kuwaits largest investment firms and has interests in banking as well as media, industrials and real estate sectors.
Burgan has taken a number of capital-boosting measures in recent months included selling treasury shares, issuing new capital via a rights issue, as well as a series of subordinated bond issues.
Earlier in December, it said it would repurchase bonds worth around $362.9m under a plan to redeem up to $730m of subordinated bonds which would no longer be eligible to boost the banks capital under Basel III rules. The bank also completed a $353m rights issue at the end of 2014.
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