CBK increases BBK stake

26 May 2006

Commercial Bank of Kuwait (CBK) has acquired the stakes of three other Kuwaiti institutions in Bank of Bahrain & Kuwait (BBK), taking its total direct and indirect shareholding to 23.6 per cent. The move forms part of a longstanding plan by CBK to take control of BBK (MEED 28:10:05).

CBK in late May purchased the 6.75 per cent stake owned by Ahli Bank of Kuwait, the 6.37 per cent stake owned by National Bank of Kuwait and the 3.75 per cent stake owned by Kuwait Investment Company for BD 0.67 ($1.76) a share. Shortly beforehand, CBK transferred 22 million of its existing BBK shares to a sister company in order to comply with Central Bank of Kuwait rules.

CBK is now the largest single shareholder in BBK. The bank will gain additional seats on the board and is understood to be aiming to increase further its shareholding. The other main shareholders are Bahraini government-affiliated institutions.

'We see considerable synergies in taking over BBK,' says a CBK official. 'We can make use of its credit card subsidiary, CrediMax. It has an Islamic investment banking licence, which can be used to serve our customers in Kuwait who want sharia-compliant banking. It has a poor cost-to-income ratio, whereas ours is good.'

CBK is also working with several other institutions to establish a bank in Syria, and has a branch licence in Iraq.

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