The identity of the Gulf investors which have bought a 28.6 per cent stake in Bahrain Middle East Bank (BMB), in a deal announced by the Kuwait Stock Exchange (KSE) on 27 June, was to be announced within a week of the deal coming to light, Bahrain-based bankers say.

The bankers say that three regional institutions - one an investment company and the other two financial institutions - have bought Burgan Bank's 28.6 per cent stake in BMB. They say that one of the institutions has taken about 17 per cent of BMB's equity, with the other two each buying about 5-6 per cent.

The institutions are to be named when the Bahrain Monetary Agency (BMA - central bank) approves the transaction. Sources say that the slight delay is the result of BMA seeking reassurance that the sale of Burgan Bank's stake is accepted by BMB's management and board of directors.

'We are unable to reveal who has bought the stake,' says Haya Abuzeid, BMB's senior vice-president of corporate communications. 'But there will be no single controlling stake in BMB, so it will be business as usual for us.' She adds that the senior management team will be unaffected, and there will be no change to the chairman or vice-chairman of the board of directors.

Burgan Bank, the Kuwait commercial bank controlled by Kuwait Investment Projects Company (Kipco), sold 103.8 million shares - representing its entire stake in BMB. The KSE added that the shares were sold at BD 0.190 ($0.50) each, for a total of BD 19.7 million ($52.3 million). This represents a premium of just under 10 per cent to the market value of the stock which stood at BD 0.173 ($0.46) when the deal was announced.

Burgan Bank was the single largest shareholder in BMB and the remaining 71.4 per cent of BMB shares are owned by an estimated 14,000 shareholders, mainly from the Gulf.

'The speed with which this deal has been done has caused some surprise,' says one Bahrain-based analyst. 'But the sale itself is less surprising. Over the last few years, whenever Burgan Bank has been stretched, speculation grows that it will strengthen its bottom line by selling its holding in BMB.' Burgan Bank reported full-year 1998 profits of KD 10.6 million ($34.8 million), a 17 per cent decline on the KD 12.7 million ($41.6 million) reported in 1997.