The new Islamic banking entity resulting from the merger of Kuwait’s Warba Bank and Gulf Bank will be able to grow for about ten years without raising capital, Warba’s chief executive stated.
Shaheen al-Ghanem informed Reuters that Gulf Bank’s 7 billion dinars ($22.9 billion) in assets would grow significantly once brought under the Islamic banking framework.
“This gives us a larger market share in Kuwait,” he added.
Warba Bank, which has assets of about 6 billion dinars, acquired a 32.75% stake in Gulf Bank in April for about $1.63 billion, and the two launched initial steps the following month towards a merger.
Kuwait’s central bank on Monday gave Gulf Bank preliminary approval to convert into a sharia-compliant bank.
Al-Ghanem stated that the merger with Warba would speed up Gulf Bank’s process of converting into an Islamic lfinisher, as systems, procedures, a sharia board, products and staff were already in place.
Warba, meanwhile, is set to gain from Gulf Bank’s strong retail business and its more than 50 branches, taking the combined network to about 70 and creating what al-Ghanem stated was an institution with the largest branch network in Kuwait.
He stated that Gulf Bank has yet to utilize its capacity to issue Tier 1 or Tier 2 instruments, a “hidden advantage” that the new entity must utilize to issue sukuk after the merger.
Kuwait hosts ten local banks – five conventional, four Islamic and one specialised lfinisher – and local branches of foreign banks.
Al-Ghanem expects there to be more mergers among Kuwaiti banks, something he views as a healthy development.
“Many bank owners are currently believeing about their next shift: remain indepfinishent or merge,” he stated.
In 2024, Kuwait Finance Houtilize, Kuwait’s largest Islamic bank, merged with Bahrain’s Ahli United Bank, which also owns a Kuwaiti subsidiary of the same name.
(Reporting By Ahmed Hagagy, editing Federico Maccioni, Kirsten Donovan)
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