KUWAIT, 24 May 2005 — Kuwait will allow a limited number of international banks and five Gulf Arab banks to open branches under a plan to open up its banking sector, the Central Bank of Kuwait governor said in press remarks yesterday.
CBK Governor Salem Abdulaziz Al-Sabah told local daily Al-Watan in an interview that “at this stage the approvals will be to a limited number of international banks known for efficiency in addition to a single branch each for the national banks of the Gulf Cooperation Council (GCC) nations.”
The Kuwaiti central bank has already given the greenlight to HSBC unit HSBC Bank Middle East Ltd., National Bank of Abu Dhabi and France’s BNP Paribas to open branches. Other international banks believed to have applied for a Kuwait license include US-based Citigroup’s Citibank and Britain’s Standard Chartered.
Salem said licensing foreign banks in reflected the government’s “conviction to liberalize financial services and vary the structure of the banking and financial system in Kuwait to develop it as a financial hub and boost its financial and commercial ties with the outside world”.
The competition expected from allowing non-Kuwaiti banks to operate in the country will ultimately improve banking services and products in Kuwait, Salem added.
“It is not expected that the presence of foreign banks in the Kuwait market will have negative consequences,” he said. “Most of our national banks are prepared for the competition with their fundamentals and capabilities, which are reflected in their solid financial indicators,” the bank governor added.
The bank approvals are being given under a new law passed last year, which canceled requirements that a foreign bank needed a Kuwaiti partner. But the law states that half a bank’s work force should be Kuwaitis, also a requirement for Kuwait’s seven local commercial banks.
Salem also said that the six Gulf Arab states have made only modest progress toward laying the ground for a planned single currency by 2010.
