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Kuwait sovereign fund takes stake in Gulf Bank
January 26, 2009 / 2:55 PM / in 8 years

Kuwait sovereign fund takes stake in Gulf Bank

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KUWAIT (Reuters) - Kuwait Investment Authority KIA.L, the oil-exporter's sovereign wealth fund, will own 16 percent in troubled Gulf Bank (GBKK.KW) after the lender completed its capital hike, an official said on Monday.

In December, shareholders in Gulf Bank approved a rescue plan ordered by the central bank to raise 375 million dinars (936.6 million pounds) in a 100 percent emergency rights issue to cover derivatives losses of the same amount.

Under the rescue plan worked out by the government, the KIA was to buy up any remaining stock from the capital increase, which it will offer later to nationals in a public offering.

"Shareholders have subscribed to 68 percent of the capital increase ... the rest will go to the KIA," General Manager Fawzy al-Thunayan told Reuters. "This means the KIA will own 16 percent of Gulf Bank."

The bank's investors have subscribed to 850.6 million shares, raising 255.17 million dinars, he said.

In October, the central bank has halted trading in Gulf Bank until the end of the restructuring and the former chairman Bassam al-Ghanim has resigned and been replaced by his brother Kutayba al-Ghanim.

The lender said in November its board of directors would resign after finalising the capital increase, and a new board would be elected.

Thunayan said he does not expect a new board to take office before March 14, while the central bank would decide when it was time to allow a resumption of trade.

KIA, which manages the Gulf state's massive oil-generated assets, is a major shareholder in many Kuwaiti companies including heavyweight Mobile Telecommunications Co (ZAIN.KW) (Zain).

KIA was managing at least 72 billion dinars of assets in the 2007/08 fiscal year to March 31, Finance Minister Mustapha al-Shamali said in July.

Last year, the government guaranteed all deposits at banks in a bid to restore confidence after Gulf Bank's difficulties raised investor fears that the problem ran deeper than first thought.

Reporting by Rania El Gamal; Editing by Firouz Sedarat

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