Sigma Capital

23-12-2024

Burgan secures CBK nod to buy Bahrain's United Gulf Bank

Source: MIST

zawya-


Kuwait-based Burgan Bank has announced that it has obtained the final approval from the Central Bank of Kuwait (CBK) to acquire 100% stake in United Gulf Bank (UGB), a licensed conventional wholesale bank headquartered in Bahrain.

A strategic investor, UGB possesses a 60% stake in Kamco Investment Company (Kamco Invest), a regional non-banking financial powerhouse headquartered in Kuwait with offices in key financial markets across the region.

The execution of this transaction remains subject to closing formalities that are expected to be completed by the first quarter of 2025.

Burgan Bank said the purchase price of this transaction has been settled at $190 million, which roughly translates to 1.0x of UGB’s current shareholders’ equity or book value.

This acquisition is expected to have an impact of 60 to 70 basis points on Burgan Bank’s regulatory capital ratios, predominantly due to the consolidation of UGB’s assets, it stated.

The final impact would be determined at the closing of shares’ transfer, it added.

Established in 1977, Burgan is a Kuwait-based conventional bank with a significant focus on the corporate and financial institution sectors. From its earliest days, it had significantly sought to diversify its offering to cater to its growing retail and private banking customer base.

On the strategic move, Group CEO Tony Daher said: "The 100% acquisition of UGB aligns with Burgan's new asset reallocation strategy and efforts to build new and diversified revenue streams."

"This transaction would benefit Burgan by providing access to Kamco Invest’s platform to further drive its non-interest income," he stated.

"Additionally, it will help expand the Bank’s footprint across the GCC region while contributing to bolstering potential revenues and synergies through UGB’s banking license," he added.

Daher pointed out that Burgan's ongoing efforts to achieve sustainable growth and implement expansion plans are guided mainly by its vision to become the most modern and progressive bank in Kuwait.

This vision is driven by a focus on key strategic pillars, including asset reallocation, embracing digital transformation, investing in human capital development, and adhering to environmental, social, and governance (ESG) standards in order to deliver an outstanding banking experience that lives up to customers’ aspirations and meets their needs.

In June, Burgan Bank had received CBK’s initial approval to engage with Bahrain’s regulatory authorities regarding the acquisition of a 100% stake in UGB.

Shortly thereafter, the bank secured a no-objection from the Central Bank of Bahrain in August, followed by final approval from CBK.

The transaction is expected to be finalized during the first three months of 2025.