United Bank of Kuwait (UBK), the London-based consortium bank, has reorganised itself to give more emphasis to its different product divisions. The bank has just announced a 25 per cent rise in net profits for 1997 to £13.9 million ($23.4 million).

General manager Chris Keen says UBK has separated its activities into distinct divisions for commercial banking, Islamic finance, asset management and property services. There are also separate units for sales and marketing and for human resources, credit and accounting. The new structure, which is intended to give each of the bank’s businesses a more distinct identity, replaces a division of labour based more on geographical regions.

Two of the divisions will be headed by new appointees. David Witham, formerly of Cedel Bank, takes charge of commercial banking and the new post of deputy chief executive. Bernhard Wagenmann has moved from Industrial Bank of Japan to run the new asset management unit (MEED 2:1:98). Other divisions will be headed by senior UBK executives. Keith Wood, a former Bank of England official, has been made a non-executive director. Previously the board was entirely Kuwaiti.

UBK, a consortium bank owned by nine Kuwaiti institutions, provides banking and investment services for a client base which is mainly from the Gulf. It has a New York branch and opened a sales office in Dubai in 1997. Interest income rose 26 per cent to £35.5 million ($59.6 million) last year, while fee income rose by about 25 per cent to £26.0 million ($43.7 million). Dealing profits also helped: during the year, UBK upgraded its treasury and started to cover convertible bonds and hedge arbitrage. ‘It was a pretty good all-round result,’ says Keen.

Although the reorganisation is complete, UBK is still looking for senior staff in property and fund management. Up to now, UBK’s property activities have concentrated on the UK, but Keen says the bank is currently assessing the French commercial property market and could look at other European countries and, eventually, opportunities in the Asia- Pacific region, notably Japan. In 1997, UBK carried out its third securitisation of UK commercial mortgages, worth £118 million ($198.2 million). It isn’t clear yet if this programme will be repeated in 1998, Keen says, though the bank will probably package up and sell some residential loans.

Analysts say there are still questions about UBK’s ownership which could be resolved in 1998. There has been talk that the Kuwait Investment Authority may sell its stake in the bank this year as part of Kuwait’s privatisation programme. Last June, Gulf Bank raised its shareholding in UBK to 17.8 per cent from 7 per cent by buying out another bank, stating that it wanted a controlling stake. Gulf Bank’s management later withdrew this statement, though it is not clear if the bank has entirely given up the idea of buying more of UBK (MEED 22:8:97).