Commercial Bank of Kuwait 2009 Profits KD0.154 Million

AlQabas reports that the Central Bank of Kuwait has approved Commercial Bank's 2009 financials.  Net profit is reported as being KD154,000 after heavy (but unquantified) additions to provisions.  The Bank reported net profit of KD100.7 million for 2008. 

However, this year earnings have been "subdued" as the Bank has built provisions starting in the Second Quarter.  At 30 September 2009, it reported a net loss of KD1.6 million.   So this is not big news if you've been paying attention.

Boubyan Bank - Capital Raising Follow-Up

It really does pay to think carefully about things, especially if one writes for a prestigious blog like this one.

There was another solution open to Boubyan Bank as Thursday's AlQabas reveals.  One that a moment or two of reflection should have occurred to at least one self proclaimed financial expert:  extend the subscription period.

Here are the main points from a press conference held by the Chairman of BB, Ibrahim alQadi (as reported by AlQ):

1. BB raised over 85% (apparently just enough to be over).
2. All the major shareholders participated:  NBK (40% shareholder); Commercial Bank of Kuwait (20% shareholder) [You recall that there are legal cases ongoing involving CBK, The Investment Dar, and Kuwait Finance House - with the latter two disputing CBK's ownership.  Acquired or not acquired as a result of a default by TID on a repo transaction involving the BB shares,   And, of course, depending on the view of your learned counsel and perhaps as well your own economic interest]; the Social Insurance Institution (4% shareholder) and other unnamed large natural person and legal entity shareholders.
3. But since BB has over 80,000 shareholders many with holdings less than 2,000 - less than 15% of the shares offered were not subscribed for.
4. According to the approval at the previous ordinary general shareholders meeting ("OGM"), the unsubscribed shares were to be offered in a public auction but the Government Department of Fatwa and Legislation refused to allow this.  The Department is I believe part of the Kuwaiti Finance Ministry. If anyone out there knows the reason for this, please post a comment.  Is it designed to protect shareholders' rights - even if they're too "lazy" to exercise them?
5. So the plan is to hold another OGM and extend the subscription period for shareholders registered as of 21 January 2010.  Presumably the dates will be set by the OGM and the price will remain KD0.255 per share.  The Board met yesterday and formally approved recommending  this course of action to the OGM.   No timing for the OGM is mentioned in the article.

Commercial Bank of Kuwait - Entire Board Resigns

CBK announced at the KSE this morning that it's board had tendered its resignation effective as of the next ordinary general shareholders' meeting ("OGM")  Shareholders may submit the names of prospective candidates for election during the period 17 January through 31 January.

No reason was given for the mass departure.  You'll recall that two board members have already resigned:  Fouad Dashti and Ahmad Muhammed Mishari.

The current Chairman and MD, Abdul Majeed AlShatti, has been on the Board since 2000 and Chairman/MD since 2004.

So this is a rather significant development.

Given the woefully inadequate disclosure at CBK's website, it's not clear when the last board election took place.  If board terms were expiring, board members could take the more politically correct stance of not standing for re-election.  They are not.  (As an aside, AlQabas has several articles in today's issue about lack of transparency, inadequate regulations and lax supervision being the "father" of the problems in the Kuwait Stock Exchange.  One particularly interesting article is here and not just for its title -----------" صمٌ بكمٌ عميٌ لا يفصحون")

When an entire board resigns, that is generally a sign of a very serious issue.  There have already been two resignations in the past month which  was the first wave.  Perhaps, the 2009 financials will shed more light.

Below is the announcement from the KSE.

[10:2:21]  ِ.استقالة اعضاء مجلس ادارة البنك التجاري الكويتي
يعلن سوق الكويت للأوراق المالية بأن البنك التجاري الكويتي
افاد بأن اعضاء مجلس الادارة في اجتماعهم المنعقد بتاريخ 12‏
يناير قدموا استقالتهم اعتبارا من تاريخ انعقاد الجمعية العمومية
العادية لسنة 2009 كما قرر مجلس الادارة في نفس الاجتماع ‏
فتح باب الترشيح لعضوية مجلس الادارة اعتبارا من يوم الاحد
الموافق 17 يناير 2010 ولغاية يوم الاحد 31 يناير 2010‏
حتى يتسنى اتمام الاجراءات الرسمية وتحديد موعد انعقاد الجمعية
العادية لسنة 2009 ليكون موعدا لانتخاب مجلس الادارة الجديد.‏

Ahmad Muhammad AlMishary Resigns from Board of Commercial Bank of Kuwait

KSE announcement below.

You'll recall that Fuad Dashti resigned earlier this month.

[13:41:56]  ِ.استقالة عضو من البنك التجاري الكويتي ‏
يعلن سوق الكويت للأوراق المالية بأن البنك التجاري الكويتي ‏
أفاده بأن السيد / احمد محمد المشاري قد قدم استقالته من عضوية ‏
مجلس إدارة البنك التجاري الكويتي وان مجلس الإدارة اعتمد ‏
استقالته في اجتماعة المؤرخ في 23-12-2009 .‏

KFH Lawsuit Against Commercial Bank of Kuwait - Re Bank Boubyan Shares

AlQabas has an article on the above topic today.

Kuwait Finance House ("KFH") has filed suit to keep Commercial Bank of Kuwait ("CBK") from disposing of shares in Boubyan Bank that it acquired because of a failed "repo" agreement with The Investment Dar ("TID").

KFH which has KD 44 million of exposure to TID apparently is arguing that CBK should not be allowed to sell the shares but rather that these should be placed at the disposal of TID's creditors.  As I understand it (and note that caveat), KFH is arguing that CBK is just another creditor of  TID and should share the collateral with other lenders.  The amount involved is significant.  At the last closing price, some US$387.5 million.  If you'll recall the estimate of assets versus liabilities, the creditors believed there was likely to be a shortfall in TID's repayment.  So including these shares in  TID's "estate" would improve the overall payback rate roughly 9 to 10%.

In any case, as per the article, the High Court has transferred the case to the Experts Department.

Some background:

1. Boubyan Bank ("BB")  was formed in 2004 as an Islamic Bank.  
2. In December 2008 TID sold CBK its BB shares (19.16% of BB) with an option to repurchase.  In effect what appears to be a form of "repo".
3. Around this time NBK received approval from Kuwait Central Bank to purchase up to 40%  of BB.  NBK is interested in BB in order to expand its franchise into Islamic banking.  For those who don't know, NBK is the premier non Shari'ah bank in Kuwait and a very strong contender for that position throughout the Arab world.
4. In May 2009 CBK announced that TID had failed to buy back the shares within the agreed time frame. And therefore it was taking control of the shares.
5. June 14 NBK announced it had agreed to buy the shares from CBK. The price  was roughly $420 million.
   
6. On 16 June responding to a motion from TID,  the Kuwaiti Court stopped the sale pending determination of ownership.
   
7. In July/August 2009, KIA auctioned its 19.8% share in BB.  National Bank of Kuwait  won 13.2% and Securities Group 6.6%.  NBK previously held 14.3% or so.  After the auction, it held 27.5% of BB and was the largest shareholder. 
   
8. NBK acquired Securities Group's shares plus some additional shares.   It is now the largest single shareholder in BB with some 40%.   And at the limit of shares it may own without further approval from the Central Bank of Kuwait.
   

Commercial Bank of Kuwait - Board Resignation - Fuad I. Dashti

CBK has announced to the KSE that Mr. Fuad Ismail Dashti has resigned as a member of its Board.

11:16:47]  ِ.استقالة عضو من مجلس ادارة البنك التجاري الكويتي
يعلن سوق الكويت للأوراق المالية بأن البنك التجاري الكويتي
افاد باستقالة السيد / فؤاد اسماعيل دشتي من عضوية مجلس
ادارة البنك وان مجلس الادارة اعتمد استقالته في اجتماعه
المؤرخ في 14-12-2009