KUWAIT, 9 January 2005 — Kuwait soon will allow more international players to enter its banking sector after granting France’s BNP Paribas a license last year to open a branch, Finance Minister Mahmoud Al-Nuri said yesterday.
“The near future will witness giving licenses to some other international banks which have big experience and reputation to open branches in the state of Kuwait,” Nuri said in a speech at the opening of a banking conference in Kuwait City.
Last January, parliament passed a law allowing licenses for foreign banks as part of Kuwait’s efforts to attract investment.
The minister did not specify the names of the foreign banks to be granted licenses. Questioned by reporters afterward, he said the Central Bank of Kuwait was mulling applications from several foreign banks. “There’s a number of banks that have applied to the central bank and in case the required criteria are met, it is the role of the central bank board to take the appropriate decision,” Nuri said.
Among banks that are believed to have already applied to start operations in Kuwait are UK-listed HSBC PLC and Standard Chartered as well as US-based Citigroup’s Citibank.
OPEC nation Kuwait, which controls a tenth of global oil reserves, was one of the Gulf’s main trade and financial hubs in the 1970s before foreign investors were scared off by the 1980-88 Iran-Iraq war and Iraq’s 1990 invasion of Kuwait.
But Kuwait is now embarking on a series of reforms, particularly economic ones, to lure foreign investment and know-how after the ouster of former occupier Saddam Hussein of Iraq in last year’s US-led war.
“The removal of the security threat from the former Iraqi regime provided big confidence in the Kuwaiti economy,” Nuri said, commenting on factors behind the improved sentiment and investment in Kuwait.
Other factors, Nuri said, include skyrocketing oil prices which boost state finances, a bigger role for the private sector in projects, as well as the economic policy of reform-minded Prime Minister Sheikh Sabah Al-Ahmad Al-Sabah who last year toured Asian nations, and who plans to visit European states soon, to market Kuwait as a viable investment hub.
Nuri said licensing foreign banks would increase competition, but “within the context of regulations and measures agreed by the Central Bank of Kuwait board, in a manner to safeguard the security and safety of the local banking sector and guarantee the protection of depositors and investors.”
For example, the law passed by parliament last year stipulates that half of a bank’s work force should be Kuwaitis, as is also required of the country’s seven local commercial banks.
