Kuwait’s Burgan Bank Says To Raise Capital This Year To Comply With Basel III

Kuwait’s Burgan Bank wants to raise more capital this year to comply with the Basel III banking industry regulations while any acquisitions were unlikely to come soon, the lender’s chief executive said on Monday.

The increase, which may happen in the third or fourth quarter of this year, could be “pure capital” or perpetual bonds or both, CEO Eduardo Eguren said, depending on discussions with regulators and shareholders.

“We are discussing this with the central bank,” he told reporters on the sidelines of the bank’s annual general meeting.

“I know that we may need to increase capital by 20, 30 per cent for sure,” he said, without giving an exact figure.

The bank only wants to issue perpetual bonds if they counted towards capital ratios, he said.

The bank’s chairman said in November that Burgan wanted to issue a bond of up to 150 million dinars ($530 million) early this year.

In terms of potential acquisitions, Egypt, Saudi Arabia and the United Arab Emirates continue to be attractive, Eguren said.

“I see opportunities all around,” he said, adding: “I have targets, but this year is not the moment. We have to continue delivering and growing as we are right now, making sure Turkey works well,” referring to the Turkish unit of Greek bank EFG Eurobank, which Burgan bought in 2012.

Burgan is the commercial banking arm of conglomerate Kuwait Projects Company. In May, KIPCO used Burgan and another subsidiary, United Gulf Bank, to take a majority stake in Malta’s Fimbank, which specialises in trade finance.

Eguren said it was important to “let the dust settle a little bit” in Egypt before considering acquisitions, in reference to political upheaval in the country.

There were also drawbacks to other potentially attractive markets, he said. Saudi Arabia is expensive and local regulators are reluctant to allow foreign companies to enter, while the UAE had too many banks but was still a critical market.

Burgan reported a big drop in fourth-quarter net profit last month, according to Reuters calculations, with its full-year earnings also significantly lower than the previous period.