By Ahmad Faraj, NNN-KUNA
Kuwait : The National Bank of Kuwait’s (NBK) acquisition of Al-Watany Bank of Egypt (AWB) is part of the bank’s regional expansion strategy adopted some years back, said NBK’s CEO Ibrahim Dabdoub.
The Egyptian banking services’ market will be growing strongly in the coming years due to demand, he said in remarks to KUNA Tuesday.
He noted that despite the large size of the Egyptian market — a population exceeding 75 million people — banking services for individuals were still at the development stage and required much improvement.
“Improving and developing the sector can only take place if new banks enter the market and introduce innovative ideas, and the market seems to be ready to embrace this,” Dabdoub added.
Moreover, he said NBK was aware of the great market competition, especially with the presence of global banks, but said that the Kuwaiti bank’s regional and international experience made it “able to stand up to the challenge and raise the market shares of AWB within a short period.”
He noted, “One must take into account that AWB is one of the few remaining opportunities in the Egyptian market and the past two years have witnessed competition from Gulf and international banks to have a foothold.” NBK is able to achieve the revenue sought by the deal, and it has been successful in earning profits for its shareholders in previous experiences, he added.
NBK’s acquisition of AWB was officially declared Monday in a deal worth USD 516 million (5.7 billion Egyptian pounds) after the Kuwaiti bank made a bid that was higher than that of two other competitors — the Commercial Bank of Kuwait (CBK) and the Greece-based EFG.
It placed the best bid financially and technically (4.16 times book value of AWB’s shares). Details of the deal are expected to be finalised by the end of this year after obtaining approval from banking authorities in Kuwait and Egypt.
Asked about the similarity in names of the two banks, he said this was a coincidence that would, no doubt, create a positive impression with clients.
He pointed out that besides the importance of the Egyptian market, the large Egyptian workforce in Kuwait and the region could not be overlooked, and that this would now be provided with distinctive banking services.
Furthermore, the CEO said NBK’s entry into this new market would boost economic cooperation between the two countries, noting that there were more than 400 Kuwaiti companies operating within Egypt in different sectors.
On a different note, Dabdoub said NBK would be expanding in the future, basing its decisions on studies and contacts over the best deals that would guarantee maximum reach both within and outside the region.
NBK had recently announced its acquisition of 40 per cent of the Turkish Bank, thereby increasing its presence in external markets.
In the first half of this year, AWB posted profits amounting to 168 per cent, reaching 146.7 million Egyptian pounds (USD 25.98 million). It has 22 branches around the country.
Egyptian authorities have been opening up their banking sector to private investors — local, Arab, and foreign — and mergers within the sector have been executed, alongside the sale of shares in public banks which have almost been completed.
NBK posted KD 144.3 million (USD 511.36 million) in the first half of this year, compared to 129 million (USD 457 million) for the same period last year. Its assets stood at KD 9.1 billion (USD 12.4 billion) at the end of June.
The Kuwaiti bank’s network of branches covers London, Paris, Geneva, New York, China, Singapore and Vietnam, as well as Bahrain, Lebanon, Qatar, Saudi Arabia, Jordan, Iraq and Turkey.