Why National Bank of Kuwait sold its 30% stake in unlisted International Bank of Qatar?

National Bank of Kuwait has sold its 30% stake in unlisted International Bank of Qatar for 155mn dinars ($537.5mn), the Kuwaiti lender said yesterday.

The largest bank in Kuwait will book a profit of 25mn dinars ($86.7mn) from the sale in its 2014 accounts, it said in a bourse filing, after the sale to an unspecified group of Qatari investors.

The profit from the sale, which is subject to regulatory approvals in Qatar, represents 61% of NBK’s fourth-quarter 2013 net profit of $142mn, meaning the sale should significantly boost its earnings this year. IBQ’s remaining 70% is privately-held by five Qatari companies, according to its annual report which did not disclose their identities.

“We have decided to exit this partnership as we saw limited opportunity to increase our 30% ownership in IBQ,” NBK chairman Nasser al-Sayer said in a statement.

Al-Sayer said the bank was getting “an attractive price” for its investment, which it entered 10 years ago, and that the capital generated from the sale would be reinvested in its business.

It is the second time in two years that a minority shareholder in a Qatari bank has sold out to local investors.

Bahrain’s Ahli United Bank sold a 29.4% stake in Ahli Bank in January 2013 to Qatar Foundation. At the time, Ahli United said it had decided to sell due to a legal inability to maintain its shareholding above the minimum level required for the Qatari entity to qualify as a strategic core investment.

NBK did not disclose a reason for selling its IBQ stake in its bourse statement yesterday.

IBQ had assets of QR28.68bn ($7.88bn) at the end of 2013 and generated a net profit of QR553.3mn, the report said. That would make it the eighth-largest lender in Qatar by assets, according to Reuters calculations.

IBQ tried to merge with Al Khaliji Commercial Bank but ended the talks in June 2011 after a year of negotiations because the lenders failed to agree on terms.