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 said.
Shaheen al-Ghanem told 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 began 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 said that the merger with Warba would speed up Gulf Bank's process of converting into an Islamic lender, 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 said was an institution with the largest branch network in Kuwait.
He said that Gulf Bank has yet to use its capacity to issue Tier 1 or Tier 2 instruments, a "hidden advantage" that the new entity must use to issue sukuk after the merger.
Kuwait hosts ten local banks – five conventional, four Islamic and one specialized lender - 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 thinking about their next move: remain independent or merge," he said.
In 2024, Kuwait Finance House, Kuwait’s largest Islamic bank, merged with Bahrain’s Ahli United Bank, which also owns a Kuwaiti subsidiary of the same name.
