Kuwait's CBK faces hurdles as it converts to Islamic bank
Commercial Bank of Kuwait ( CBK ) was granted permission by the Central Bank of Kuwait to issue KWD 120 million (USD 425 million) in Basel III-compliant bonds, which could complicate the process of CBK converting into an Islamic bank. CBK has had to write off loans that have significantly impacted its profitability and may be the reason the bank needs to issue capital-raising bonds. However, issuing capital raising bonds may complicate the conversion process since Basel requirements place limitations on the call provisions included in bonds issued to raise capital. The bank will continue to have an interest-bearing liability for five years, which is much longer than the typical period for a conventional bank that has converted to an Islamic bank.
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