Mubasher: Burgan Bank has sold its full stake in Bank of Baghdad, representing 51.8%, to its sister company, United Gulf Holding company.
The deal reinforces Burgan Bank’s strategy to improve returns on risks for the bank’s shareholders, according to a bourse filing on Sunday. Moreover, it will allow the bank to focus on its main market in Kuwait while largely integrating and collaborating with its subsidiary banks working in Turkey, Algeria, and Tunisia.
The deal conclusion will be subject to the approvals of competent authorities in Iraq, the statement said.
The transaction may have a one-time negative impact on the net income by KWD 9 million ($29.8 million) in 2019, however, part of the impact is likely to be covered for one time by nearly KWD 4 million following the deal conclusion.
On the contrary, Burgan Bank expects to maintain a good level of earnings in fiscal year 2019. Furthermore, the transaction will improve Burgan Bank Group's quality of assets, as bad debts will be reduced by KWD 34 million; this equals 70 basis points (bps) on the group’s bad debts rate.
It is worth noting that over the first nine months of 2019, Burgan Bank showed a profit of KWD 67.45 million, 4.9% lower than KWD 70.96 million in the same period in 2018.
