Banking and Finance

The Central Bank of Kuwait (CBK) is the Government's sole agent for control of monetary policy and the supervision of banks, insurance and investment companies. There are six Kuwaiti-owned commercial banks " Al Ahli Bank, the Bank of Kuwait and the Middle East, Burgan Bank, the Commercial Bank of Kuwait, Gulf Bank and the National Bank of Kuwait. In addition, there is the Kuwait Finance House which is a Kuwaiti-owned Islamic financial institution offering Islamic banking services. The Bank of Bahrain and Kuwait (BBK) is a 50% locally-owned branch. Also, there are three specialist banks " the Industrial Bank of Kuwait, the Kuwait Real Estate Bank and the Savings and Credit Bank (SCB).

Consolidated total assets of the commercial and specialist banks (except BBK and SCB) were over $42 billion at the end of 1987. Total shareholder's funds were $4.2 billion which represent very healthy debt-to-equity ratios in line with the world's top banks. Distribution of bank credit to the private sector was mainly in personal facilities.

There are four partially state owned Insurance Companies " Al-Ahleia Insurance Company, Gulf Insurance Company, Kuwait Insurance Company and Warba Insurance Company. These companies insure all risks of the State owned or partially owned companies as well as participate with overseas insurance companies for the insurance needs of the private sector. For the year 1997, these companies had total net premium income of $75 million and have total Assets in excess of $750 million.

The Kuwaiti Dinar (KD) is a freely convertible currency. It floats against a trade weighted basket of currencies with daily fixing. The U.S. Dollar is the dominant currency in the basket as it represents about 60 % of trade. Consequently, the KD has remained relatively stable against the U.S. Dollar since 1993 ranging from a low of 297.62 fils per US$ to a high of 305.57 fils (there are 1000 fils per Kuwaiti Dinar).

The Discount Rate " against which all local commercial rates are linked " is set by the Central Bank of Kuwait and has also been relatively stable during the 1990s. It has ranged from a low of 5.75% for most of 1994 to a high of 7.5% in early 1993. The policy of stable interest and exchange rates provides the required fertile ground for sound economic growth.

The Kuwait Stock Exchange officially regulated trading in 1983. Trading previously had been on an informal basis. In 1995, the Exchange introduced electronic trading that eliminated settlement delays. Quoted companies fall into eight main sectors: Banking, Investment, Insurance, Real Estate, Industrial, Services, Foodstuffs and non-Kuwaiti companies. For the year 1997, there were 588,172 deals transacted representing a turnover of $35 billion of which over 50% was in the Investment and Real Estate sectors. There are moves afoot to expand the market by allowing non-GCC nationals to participate in the market.