By Ahmad Faraj
KUWAIT, Sept 15 (KUNA) -- The Cabinet's approval of a draft decree
establishing Warba Bank, with a capital of KD 100 million of which a
76-percent-stake will be held by citizens and subscribed to on their behalf by
the government, is considered a unique financial initiative at the regional
and international levels.
The uniqueness of this initiative stems from several reasons, the first
being that it sets a new precedent; no government has established a bank and
allocated the majority stake to citizens with nothing in return, as a type of
long-term investment and to create some form of stability for the coming
Furthermore, this is the first bank in which all Kuwaitis, with no
exceptions, will be holding shares, making Warba Bank the first shareholding
company in the world to represent 100 percent of the people at establishment.
Late last night, the Cabinet approved a draft decree to establish the
shareholding Islamic Sharia-compliant bank with a KD 100 million capital, with
24 percent of its stocks held by Kuwait Investment Authority (KIA), and the
remaining 76 percent granted as bonus shares to all Kuwaitis alive on the day
that the decree is published in the official gazette.
The bank's shareholders will exceed one million, as the Kuwaiti population
stood at 1.087 million in 2008, thus making it the bank with the largest
number of shareholders in Kuwait, and one of the greatest in the Arab region.
The Kuwaiti banking sector groups six conventional groups (one of which is
in transition towards becoming Sharia-compliant) and three Islamic banks, as
well as a group of foreign banks operating here after obtaining licensing from
the Central Bank of Kuwait (CBK).
Kuwait's Islamic banking market is one of the fastest-growing and most
influential in the region. Kuwait Finance House is one of the oldest Islamic
banks in the world, while the Sharia-compliant Boubyan Bank was established in
2004. Kuwait Real Estate Bank transformed into an Islamic bank and came to be
known as Kuwait International Bank, while the Bank of Kuwait and the Middle
East is in the transition towards becoming a full-fledged Islamic bank.
Some 873,000 Kuwaitis subscribed to shares of Boubyan Bank at establishment
in 2004, at 80 percent of the Kuwaiti population. The bank had a capital of KD
100 million, with KIA holding 20 percent, the Public Institute for Social
Security (PIFSS) holding four percent, and the rest open to public
Despite lack of details pertaining to the next step, the nature of the
establishment of Warba Bank makes it different from any other shareholding
company, as the government will be subscribing on behalf of the citizens, as a
form of grant.
The basic steps for the establishment of the bank will apply nonetheless; a
constituent committee will be set up to monitor subscription, following which
a constituent assembly will be held to elect a board of directors. Only then
can the bank operate, in line with the regulations of the CBK, the Ministry of
Commerce and Industry, and Kuwait Stock Exchange when it is listed at a later
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