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Kuwaiti lenders Boubyan Bank and Gulf Bank have decided not to go ahead with merger plans, which would have created a single Shariah-compliant bank with more than $50 billion in assets.
Both the banks said they have agreed to call off the merger and to terminate the signed agreements following the disclosure that a major shareholder, Alghanim Trading, would divest its entire 32.7% stake in Gulf Bank to Kuwait’s Warba Bank.
Warba Bank confirmed last week it had signed an agreement to buy the entire stake of Alghanim Trading in Gulf Bank for 498.2 million Kuwaiti dinars ($1.61 billion)
Boubyan, the second-largest Islamic bank in Kuwait, and Gulf Bank, the country’s fifth-largest lender, agreed that the transaction could lead to material changes in the nature of Gulf Bank’s organisational and financial structure, which potentially may affect their objectives and priorities.
"Following discussions, both parties have mutually agreed to call off the previously disclosed marger project," Boubyan Bank said.
In July last year, both banks confirmed that their respective boards had approved the proposal to consider combining the two entities as part of a strategy to support growth.
The merger would have created an Islamic bank with assets of around KWD 16 billion, according to Fitch Ratings in August.
(Writing by Cleofe Maceda; editing by Brinda Darasha)
