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Kuwait's Burgan Bank to sell stake in Iraqi bank

Kuwait's Burgan Bank KPSC agreed to sell its 51.8% stake in Bank of Baghdad PJSC, subject to approval of Iraqi regulatory authorities, to Bahrain-based United Gulf Holding Company BSC for an undisclosed sum.

The transaction is expected to result in a one-time negative impact of about 9 million Kuwaiti dinars on Burgan Bank's net income for 2019, but roughly 4 million dinars of the impact will likely be reversed following the deal's completion.

Burgan Bank said it expects to maintain its healthy level of profitability for 2019 despite the impact, adding that the acquisition will reduce its nonperforming loans by about 34 million dinars, resulting in a positive impact of approximately 70 basis points on the group NPL ratio.

Burgan Bank noted that the sale will allow it to focus its core market in Kuwait and boost synergies with its Turkish, Algerian and Tunisian units, and is in line with its strategy to further improve risk-adjusted returns for shareholders.

As of Jan. 3, US$1 was equivalent to 30 Kuwaiti fils.