Kuwait Finance House tops banks locally

Kuwait Finance House (KFH) has taken the top spot among banks locally and the 161st place globally, among the list of the top 1000 banks worldwide issued by "The Banker" international magazine. It’s worth noting that KFH’s leadership and the diversity of its investments through presence in various areas of investment as well as the global expansion provides the bank with investment opportunities. KFH posted in the first half of this year a gross profit of KD 144.032 million (USD 510.887 mln), and net profit for shareholders was KD 54.568 million (USD 193.555 mln) with an increase of 10% over the same period last year. Total Assets increased by 11 % over the same period last year to reach KD 16.7 billion (USD 59.3 bln), shareholders’ equity reached KD 1.7 bln (USD 6.1 bln).

Kuwait’s Burgan Bank to meet investors ahead of potential Tier 1 bond

Kuwait’s Burgan Bank has chosen banks to arrange meetings with investors ahead of a potential issue of a capital-boosting bond. The lender will hold roadshows in Asia, the United Arab Emirates and Europe from Sept. 4, with a bond issue that enhances the bank’s Tier 1 capital ratio to follow, subject to market conditions. Should the US dollar-denominated bond issue happen, it will have a perpetual lifespan and be of benchmark size. Burgan Bank’s chief executive, Eduardo Eguren, said in March that the lender wanted to raise its capital before the end of the year to help it comply with Basel III guidelines, with perpetual bonds a potential route. The investor meetings will be arranged by HSBC as global coordinator and Citi, JPMorgan and National Bank of Abu Dhabi as lead managers.

Bahrain's Gulf Finance House gets $105 mln facility from Kuwait Finance

Bahrain's Gulf Finance House (GFH) said on Wednesday that it had signed to obtain a $105 million, five-year Islamic credit facility from Kuwait Finance House, which would help GFH redeem two syndicated debt facilities and allow the release of some major GFH assets. GFH, which suffered heavily in the wake of the global financial crisis and required multiple debt restructurings, said Kuwait Finance House would have an option to convert its outstanding debt into GFH shares. It did not elaborate on the terms of any equity conversion. The Bahraini firm noted that it had paid down some $30 million of current outstanding debt facilities to date in 2014, representing payment of more than 15 percent of its total liabilities.

Moody's affirms National Takaful Insurance Company's Ba1 IFS Rating; outlook stable

Moody's Investors Service, has today affirmed the Ba1 insurance financial strength rating (IFSR) of National Takaful Insurance Company K.S.C., based in Kuwait. The rating outlook was changed to stable from positive following the decline in the shareholders' and policyholders' (consolidated) equity in 2013. Moody's Ba1 rating reflects National Takaful's good position, with a top-three market share in the domestic Takaful market. The rating affirmation also reflects the recent improvement in underwriting profitability. This has restricted further deterioration in the policyholders' fund. However the change in outlook to stable from positive reflects the decline in consolidated equity.

Islamic banking takes hold in Kuwait

An increasing number of Kuwaiti lenders are moving away from traditional banking in a bid to tap into a booming market for Sharia-compliant financial products in the region - a move that could soon see Islamic financing overtake conventional banking in the Gulf state. Commercial Bank of Kuwait (CBK) is the latest to unveil plans to turn into a fully-fledged Islamic institution. There are already five other Kuwaiti Islamic banks; Kuwait Finance House (KFH), Boubyan Bank, Al Ahli United Bank, Kuwait International Bank, and Warba Bank, which was established in 2010. This compares with four conventional banks. Kuwait’s Islamic banking assets grew by 8.7% during the first nine months of 2013, reaching KD22.5bn ($79.7bn), while Islamic financing grew by 11.2% to hit KD13.5bn ($47.8bn) during the same period.

Kuwait's CBK faces hurdles as it converts to Islamic bank

Commercial Bank of Kuwait ( CBK ) was granted permission by the Central Bank of Kuwait to issue KWD 120 million (USD 425 million) in Basel III-compliant bonds, which could complicate the process of CBK converting into an Islamic bank. CBK has had to write off loans that have significantly impacted its profitability and may be the reason the bank needs to issue capital-raising bonds. However, issuing capital raising bonds may complicate the conversion process since Basel requirements place limitations on the call provisions included in bonds issued to raise capital. The bank will continue to have an interest-bearing liability for five years, which is much longer than the typical period for a conventional bank that has converted to an Islamic bank.

Kuwait Finance House ratings affirmed by Capital Intelligence

Capital Intelligence (CI) has announced that it has affirmed the Financial Strength Rating (FSR) of Kuwait Finance House (KFH) of 'BBB+'. The rating is supported by KFH's dominance of the Islamic banking sector in Kuwait, as well as its large overall market share in both deposits and loans, and by the significantly improved equity base following the June 2013 rights issue. The rating is constrained by a less than satisfactory asset quality in terms of headline non-performing facility ratio and reserve coverage, and by poor profitability at the net level. Looking ahead, the growing international component of both revenues and balance sheet is likely to eventually become a supporting factor.

Kuwait’s CBK gets approval to raise up to 120m dinars via bonds

Commercial Bank of Kuwait has received regulatory approval to issue up to 120 million dinars ($425.8 million) of bonds, as it prepares to convert into an Islamic bank. In April, CBK shareholders approved both the issuance of the subordinated bonds and plans to convert the lender into a full-fledged Islamic bank. The bonds will comply with Basel-III rules. While CBK said its conversion would not be immediate, it would leave Kuwait with only four local conventional banks and could help tip the Islamic banking industry’s market share above an estimated 40 per cent. CBK is not the first to convert into an Islamic bank, with Boubyan and Al Ahli having done so previously.

Kuwait authority rejects GFH plea

Kuwait's Capital Markets Authority (CMA) has rejected an appeal by Bahrain-based Gulf Finance House (GFH) against the regulator's decision to monitor its Kuwait-listed shares. The CMA decided to monitor the stock after it was traded in high volumes ahead of a company disclosure last year. GFH, which said the events were unrelated, appealed last month. However, the CMA commissioner board has maintained its previous decision in this respect after reviewing the details of the subject. In recent months, Kuwait's regulator has been clamping down on what it sees as unusual market activity.

KSE starts month with gain

Kuwait stocks pulled higher as the month started on a positive note. The bourse rose to 7321.12 pts. Some mid and small caps shined but heavyweights closed mixed. The market was mainly cautious even when investors looked for direction. The sectors closed mostly positive.

Kuwait's Investment Dar makes new offer to creditors

Kuwait's Investment Dar has made a settlement-in-kind offer to creditors, in the latest of a long line of restructurings at the company. In a statement, it said the new offer was presented to creditors at a meeting in Dubai on Wednesday, and that it was optional and voluntary. The offer is an alternative to a proposal Dar made under a KD1 billion ($3.6 billion) debt restructuring plan agreed in 2011. There were no details of the type or value of assets offered under Wednesday's proposal. Giving reasons for the new settlement offer, Investment Dar said it had originally hoped that one of its "major assets" would have been returned to it by now through the Kuwaiti judicial system, but that this had not happened. The company has been in a long-running legal battle over a stake it once held in Bouyban Bank.

Bahrain's GFH appeals Kuwait market regulator monitoring

Bahrain-based Gulf Finance House has appealed a decision by Kuwait's financial regulator to monitor its Kuwait-listed shares after the stock was traded in high volumes ahead of a company disclosure last year. In recent months, Kuwait's Capital Markets Authority (CMA) has been clamping down on what it sees as unusual market activity. Some executives and analysts have welcomed the move but others say the watchdog is being heavy-handed. Kuwait's regulator noticed GFH stock traded in high volumes in May 2013. The regulator notified GFH of its probe into the firm last September and said in April this year that it would monitor the stock for six months.

KFH concludes course for Wealth Management staff

Kuwait Finance House (KFH) and Fitch Learning concluded a three-month paradigm training course in order to enrich the banking experience of employees, and boost their productive abilities. The training course had a capacity of 90 trainees that were divided into six groups. Fitch Learning staff gave this course based on the requirements of employees. Workshops witnessed competitive performance among the trainees. The course was divided into Sukuk, Client Handling Framework, Real Estate, Traded Equity, Private Equity, Asset Allocation and Diversification. After assessing the requirements of Wealth Management, the bank collaborated with Fitch Learning, in order to address those needs.

KFH chief executive steps down amid management restructuring

The CEO of Kuwait Finance House (KFH), the Gulf country’s largest Islamic lender, has reportedly stepped down, according to two company sources. Mohammed al-Omar’s resignation as CEO is linked to wider management changes at KFH, one of the sources said.

Kuwait Finance House Q1 Profit Rises But Misses Estimates

Kuwait Finance House (KFH) reported a 13 per cent rise in first quarter net profit which rose to 26.06 million dinars ($92.54 million) from 23.0 million dinars in the same period a year ago. Revenues were 1 per cent higher at 224.4 million dinars. Five analysts in a Reuters poll had estimated an average net profit of 32.76 million dinars for the quarter. KFH’s total assets were 17.3 billion dinars at the end of the first quarter, an increase of 16 percent compared to the same time last year while deposits rose 7 per cent to 636 million dinars. Shares in the company closed at 0.85 dinars on Thursday on the Kuwaiti stock market, which reopens on Sunday. Chairman Hamad al-Marzouq said KFH wanted to expand in Turkey and adjacent countries’ markets, without giving details.

Independent entity must for Sharia supervision

An independent legal entity should oversee the way in which Islamic financial institutions certify they are following sharia principles, Kuwait’s central bank governor Mohammad Al-Hashel said. Currently, boards of sharia scholars at financial institutions rule on whether activities and products follow religious principles. They are also involved in audits that determine whether the institutions are operating in a compliant manner. At the same time, the scholars are on the payroll of the Islamic banks which they vet, an arrangement contrary to good governance. The growing role of Islamic finance in some national economies is now prompting government watchdogs to pay more attention to the sector. The creation of an independent legal body could see scholars independently reviewing the work of their peers. Establishing the body would involve challenges but it could take its cues from the conventional financial auditing profession.

Kuwait's takaful firms struggle in crowded market

Kuwait's takaful firms are still struggling in a crowded market that faces cut-throat competition. This has led to stagnant growth and persistent losses for takaful firms operating in Kuwait, raising doubts about the sector's long-term viability. In a market with 32 insurers, takaful firms say they are at a disadvantage to their conventional peers which have built solid customer bases and amassed large financial surpluses. Kuwaiti takaful firms posted a combined 47.4 million dinars ($167.7 million) in premiums in 2012, an 18.7 percent share of the total. However, many companies in the sector have failed to post consistent profits. Furthermore, the takaful sector lacks a dedicated supervisory body, leaving an opening for negative competitive practices. In the meantime, looking abroad may be the only good option for the Kuwaiti takaful firms which can afford it.

$1.2 billion settlement in kind between The Investment Dar and its creditors

Tribonian Law Advisors (TLA) acted as lead counsel to The Investment Dar K.S.C. (TID) in a transaction that involved a $1.2 billion settlement in kind with just under a third of its creditors by value. Participating creditors settled existing FSL claims at a significant discount in exchange for cash, debt and equity participation in a newly formed Jersey entity, to which various assets of TID were transferred. The debt in the Jersey entity was structured on a loan-to-value basis and provided enhanced security and information rights. Approximately 29 per cent of TID’s creditors elected to participate in the transaction. Non-participating lenders benefited from the transaction by seeing a 2.1x multiple reduction in the liabilities settled versus the realisable asset value which was contributed to the Jersey entity.

Kuwait Finance House KSC : “KFH” offers educational product with credit privileges

Kuwait Finance House (KFH) offered a new financing product that allows the public to purchase seats at schools and universities using monthly installments. KFH purchases seats at universities, schools, and institutes, then resells those seats to the public. People can pay through monthly installments, and the ceiling of the service is KD 15,000. The first installment can be postponed for six months, and the service is possible for all people in Kuwait, regardless of whether they are KFH clients or not. However, the service is subject to the credit rules and regulations. The person requiring the service must have an original price quote, original ID, a recent salary certificate that shows the net salary, and a balance inquiry for the clients of other banks.

Kuwait's Investment Dar says a third of creditors to accept deal

The indebted Kuwaiti shareholder of British luxury carmaker Aston Martin has persuaded just under a third of its creditors to accept a debt restructuring deal that offers them shares in a portfolio of its assets. The sharia-compliant investor defaulted on a $100 million Islamic bond payment in 2009, leading it to restructure around $3.7 billion in debt two years later. Under the new deal which was accepted by 29% of Investment Dar's creditors, they settled claims at a 62.6 percent discount in exchange for cash, debt and equity held by a vehicle based in Jersey. In May, Investment Dar said creditors which did not want to take part in the offer could retain their claims under an original restructuring plan, which offered creditors a 10 percent stake.

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