KUWAIT -- Five years ago, Kuwait had only one Islamic bank, but by 2010, the country will have five Islamic banks, the same number as traditional banks.

The announcement of the Central Bank of Kuwait (CBK) on Monday giving the green light for the Bank of Kuwait and the Middle East (BKME ) to fully convert into an Islamic bank raises the number of Islamic banks in Kuwait to four, in addition to Warba Bank which is currently under establishment.

The total capital of the five Islamic banks is about KD 645 million, around 42 percent of the total capital of the banking sector in Kuwait.

By the end of the third quarter of 2009, one out of the three operating Islamic banks made profits, while two suffered losses.

The establishment of Warba Bank as a shareholding company with a capital of KD 100 million was announced a few month ago.

A total of 24 percent of the stocks of the Islamic Sharia compliant bank is held by Kuwait Investment Authority (KIA ), and the remaining 76 percent will be granted as bonus shares to all Kuwaiti citizens registered at the public Authority for Civil Information (pACI ) until October 4, 2009.

Traditional banks were negatively affected by the growth of Islamic banks, therefore several of them began providing Islamic services and products.

In addition, some traditional banks established panches apoad due to the strong competition locally.

By Ahmad Faraj

© KUNA (Kuwait News Agency) 2009