Burgan Bank has recently received the final approval from the Central Bank of Kuwait (CBK) to acquire 100% stake in United Gulf Bank (UGB), a licensed conventional wholesale bank headquartered in Bahrain.
The execution of this transaction remains subject to closing formalities that are expected to be completed by the first quarter (Q1) of 2025, according to a press release.
The purchase price of this transaction has been settled at $190 million, which roughly translates to 1.0x of UGB’s current shareholders’ equity or book value.
This acquisition is expected to have an impact of 60 to 70 basis points (bp) on Burgan Bank’s regulatory capital ratios, predominantly due to the consolidation of UGB’s assets.
A strategic investor, UGB possesses a 60% stake in Kamco Investment Company (Kamco Invest), a regional non-banking financial powerhouse headquartered in Kuwait with offices in key financial markets across the region.
Group CEO of Burgan Bank, Tony Daher, said: “The 100% acquisition of UGB aligns with the Bank’s new asset reallocation strategy and efforts to build new and diversified revenue streams.”
Daher added: “This transaction would benefit Burgan by providing access to Kamco Invest’s platform to further drive its non-interest income. Additionally, it will help expand the Bank’s footprint across the GCC region while contributing to bolstering potential revenues and synergies through UGB’s banking license.”
In June 2024, Burgan Bank received CBK’s initial approval to engage with Bahrain’s regulatory authorities regarding the acquisition of a 100% stake in UGB. Shortly thereafter, the Bank secured a no-objection from the Central Bank of Bahrain in August, followed by final approval from CBK.
