 |
| Eduardo Eguren, CEO, Burgan Bank |
In 2008 we set out on a growth strategy to build up our international capabilities and footprint, in the process helping to diversify our revenue streams and risks. The expansion started with the acquisition of controlling stakes in Jordan Kuwait Bank, Gulf Bank Algeria, Bank of Baghdad and Tunis International Bank.
After those four banks had been integrated into the group, the strategy continued with the acquisition of Turkey’s Eurobank Tekfen (now operating under the name Burgan Bank Turkey) in 2012. This year we acquired, alongside our sister company United Gulf Bank, a controlling stake in FIM bank in Malta.
The Turkish economy has the right fundamentals: it is a growing market, with growing demographics, a well-regulated banking sector and the trade lines between Turkey and MENA are growing fast. Kuwait is the largest investor from the Gulf Cooperation Council states in Turkey, and many of our clients are benefiting from our presence in such a promising market. Turkey as a market, and the subsidiary, offer a strategic fit to Burgan Bank.
As for Malta, one of the objectives of our expansion strategy is to add capabilities and footprints. FIM Bank is a specialized trade finance bank that has a presence in almost all trade finance hubs globally. By acquiring FIM Bank, we can offer our clients a differentiated offering that is [provided] only by global players. What’s more, it is considered as an EU ticket.
As a group, we are interested to be in markets that are growing faster than our core market, [that are] non-oil dependent and of course ones that have the right economic fundamentals for sustainable growth.
We are a MENA bank and MENA will be our main region of interest. We like to support our Kuwaiti clients who conduct business abroad. We have stated publicly that we are interested in four markets: Turkey, Saudi Arabia, the UAE and Egypt. Turkey is done. We are looking at the other markets carefully, but we need to digest what we acquired in 2012 and 2013 first. However, we will always be ready to pin down opportunities if they arise.
|
Further reading |
Trade ties are very important. Trade grows faster than the economy. Kuwaitis are traders by nature; they were so even before oil was discovered. The links to trade partners are important. We always consider trade ties when considering targets. However, we are a commercial bank that runs as a federation. The growth potential in the target’s own market is very important as well. You have to look at this from all angles.
Any market that will not offer a strategic fit for us is not considered.
We do not do acquisitions for the sake of acquisitions per se or just for building scale. We manage by returns and maximizing shareholder value, and this is a dogma for us.
Diversification is needed, especially when the economy in your core market is not growing or growing slowly. You need to diversify and have access to markets that are growing faster than your economy and of course have the right economic fundamentals. Gulf countries are still oil-dependent, and non-oil-sector growth rate is at low single digits. Diversification makes perfect sense.
