QNB Said to Bid for Kuwait Finance House's Malaysian Operations

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  • Deal would add to $3 billion of acquisitions by QNB since 2012
  • Kuwait Finance was first foreign Islamic bank in Malaysia

Qatar National Bank SAQ, the biggest Middle East lender by market value, is among suitors that submitted final bids for Kuwait Finance House KSC’s Malaysian operations, people with knowledge of the matter said.

Kuwait Finance House is evaluating offers from Qatar National Bank and at least one other party, according to the people. It may not proceed with the sale unless it can agree on a high enough price, one of the people said, asking not to be identified as the information is private.

State-controlled Qatar National Bank has been expanding overseas to reduce its reliance on a home market of 2 million people. It has spent $3 billion on acquisitions since 2012, including purchasing Societe Generale SA’s Egyptian unit and increasing its stakes in banks in Togo and Tunisia, data compiled by Bloomberg show.

Kuwait Finance House’s Malaysian unit had a book value of 1.7 billion ringgit ($395 million) and total assets of 10.5 billion ringgit at the end of December, according to its 2014 annual report. Offers for the business were affected by the difficult economic environment in the country, one of the people said. 

Listed Malaysian banks trade at a median 1.16 times their latest book value, down from 1.56 times at the end of 2014, according to data compiled by Bloomberg. The country has been struggling to boost confidence in its economy since oil prices started slumping late last year and growth slowed to 4.9 percent in the second quarter from a year earlier.

Kuwait Finance House is contemplating a sale or restructuring of its Malaysian unit and will conclude the review by the end of this month, Group Chief Executive Officer Mazin Saad Al-Nahedh said at a conference Tuesday. A spokesman for Qatar National Bank said he couldn’t immediately comment.

Kuwait Finance House, the first foreign Islamic bank to operate in Malaysia, is selling the business to focus on expansion in the Middle East and North Africa. Its operations in the nation include retail and commercial banking, home financing, corporate advisory, asset management and an arm operating in the offshore financial center of Labuan.