Kuwait to allow in more international banks

Jan 10, 2005 01:00 AM

Kuwait 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.
"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 afterward, he said the Central Bank of Kuwait was mulling applications from several foreign banks.
"There are 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 and Standard Chartered as well as US-based Citigroup's Citibank. Kuwait was one of the Gulf's main trade and financial hubs in the 1970's 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 an economic report, Kuwait's economic expansion is expected to plateau in 2005 after strong growth last year.
"When all is said and done, we expect nominal GDP to register an above-trend 14.9 % expansion in 2004 to nearly 14.3 bn Kuwaiti dinars ($ 48.6 bn)," Kuwait-based Global Investment House said in its latest report.

Kuwait's economy posted another year of exuberant growth on record high oil prices and increased production levels as well as a strong performance from the non-oil sector of the economy, the leading brokerage and investment firm noted. Nominal gross domestic product had surged by 16.4 % in 2003, Global noted.
These figures compare with anaemic growth in previous years. In 2002, nominal GDP rose 2.4 % while real GDP declined 0.4 %. For 2004, Kuwait was seen recording a 6.8 % real GDP rise, following estimated growth of 9.9 % in 2003, it said. Global said it views the economy's prospects in 2005 as plateauing, with real GDP growing less than 3 %.

With oil prices expected to fall during the year and OPEC having opted for a production cut in December, oil revenues for Kuwait will most likely register a decline, the report said. OPEC member Kuwait controls a tenth of world petroleum reserves and the sale of its crude oil accounts for up to half of GDP and up to 90 % of state revenue.
Kuwait benefited from the ouster in 2003 of the regime of Saddam Hussein in the US-led war in Iraq. Once non-existent cross-border trade flourished and Kuwaiti firms won lucrative telecom, supply and other contracts in post-war Iraq.

"Also, we expect upward movements in imports, as a number of heavyweight capital projects may be commenced in 2005, resulting in a narrowing of the gap in net trade," Global said.
"Countering this though is our upbeat stance regarding a quicker pace of activation in the economy away from oil."

Source: AFP
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