KUWAIT: Gulf Bank and Boubyan Bank reached a preliminary agreement to explore growth opportunities by merging to create a single bank compliant with Islamic sharia, the two banks announced Wednesday. The step follows Gulf Bank’s announcement of obtaining Central Bank of Kuwait approval to convert to an Islamic bank, drawing interest from Boubyan Bank for the merger to create a competitive Islamic bank.

In a listing on Boursa Kuwait, Gulf Bank said it shares a vision with Boubyan Bank to seize a strategic opportunity for growth and expansion through a merger. Creating a single bank compliant with Islamic sharia goes in line with Gulf Bank’s efforts to “adopt new visions for prosperity through analysis of all cooperation opportunities to help the bank achieve its goals of sustainable growth and create added value to its clients and investors,” it said.

Boubyan Bank Vice Chairman and Group CEO Adel Al-Majed

The boards of Boubyan Bank and Gulf Bank have approved the proposal, and the Central Bank of Kuwait was notified of their plans, the banks said in separate regulatory filings on Wednesday. Boubyan Bank and Gulf Bank said they plan to sign a memorandum of understanding and a non-disclosure agreement to proceed with due diligence and valuation discovery, in addition to studying the feasibility of the proposal. Any transaction will be subject to approval from regulators, including the Central Bank, the filings said.