DUBAI: Commercial Bank of Kuwait (CBK) has cut its stake in Boubyan Bank to about 12.7 percent from the 19.9 percent which it held in September, CBK’s chief executive said yesterday.
Most of the reduction occurred during heavy market trading on Tuesday, Kuwait Stock Exchange data showed.
“We are selling the proportion we can sell,” CBK chief executive Elham Yousri Mahfouz told Reuters by telephone. “We have the right to and Basel III is coming, so it’s better for banks to improve their capital ratios.”
The stake dropped to 17.7 percent on Monday, the data showed, and Mahfouz said yesterday that it had fallen further to 12.7 percent. A 7.2 percent holding in Boubyan would have fetched about $200m at yesterday’s market price.
CBK, Kuwait’s fifth-largest bank by assets, has been striving to boost its capital to comply with Basel III capital adequacy rules, which are being phased in around the world.
In November it cancelled the sale of a KD120m ($413m) bond which would have boosted its capital reserves, citing “legislative and technical issues”.
The bank sold as many Boubyan shares as it could without affecting those linked to a legal dispute with Islamic investment firm Investment Dar, Mahfouz said.
The two companies have been embroiled in litigation over a stake in Boubyan which Investment Dar sold to CBK in 2008, with the right to buy it back.
Investment Dar, which hopes to sell the stake to repay creditors, said in a bourse filing last month that Kuwait’s Court of Appeal had referred the case to the Court of First Instance in the Commercial Courts. It did not elaborate.
Boubyan’s stock price rose 1.25 percent to 0.405 dinar on Tuesday, but the identity of the buyers of Boubyan shares was not clear. National Bank of Kuwait, the country’s biggest bank, owns 58 percent of Boubyan, according to Thomson Reuters data.
In a statement on Tuesday, Boubyan said the strong activity involving its stock was not linked to any news, speculation or rumours concerning the lender’s assets or activities.
Reuters
