Sale of Jordan Kuwait Bank keeps Burgan Bank Group under Basel III requirements

Majed Essa Al-Ajeel, chairman of Burgan Bank
Majed Essa Al-Ajeel, chairman of Burgan Bank

The recent sale of Jordan Kuwait Bank by Burgan Bank Group (BBG) has created more capital for the company and offered opportunity to expand in the coming years.

Burgan Bank has attempted to enhance its capital for more than five years, and selling Jordan Kuwait Bank to subsidiary of the Kuwait Projects Company (KIPCO) Group follows the trend of actions other banks have taken since Basel III was enacted.

“This capital-friendly solution allows us to strengthen our focus on execution and further improve our earnings,” BBG CEO Eduardo Eguren said. “Jordan Kuwait Bank is a great asset that will remain part of the KIPCO Group, allowing us to keep our link to such a well-run bank.”

Other actions taken by Burgan included selling treasury shares and issuing new capital via a rights issue -- as well as a series of subordinated bond issues.

The sale of the bank provided profits of over 500 million (KWD) in Burgan’s risk-weighted assets. The subsequent ratio of a bank's capital to its risk was predicted to be in excess of 15 percent at the end of 2015.

“This move has positioned the bank with capital levels comfortably in excess of that required under the Basel III regime,” Majed Al-Ajeel, chairman of Burgan Bank, said. “It also gives us capacity to grow for the next few years without the need for further capital.”

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