Islamic bank Kuwait Finance House, the country's second largest lender by market value, wants to use cash from a $1.06 billion share sale to expand in the Middle East and possibly Asia.
The bank is considering applying for licences in Saudi Arabia and Qatar as it braces for more competition at home from a fast-expanding smaller rival, Boubyan Bank, and a third Islamic lender being set up by the government.
Kuwait Finance is working on expansion in Turkey and Morocco, although its focus will be on the six oil-producing countries of the Gulf Cooperation Council (GCC), General Manager Mohammad al-Omar told Reuters in an interview.
"We are looking forward to expand within the GCC and maybe in Far East," he said.
Omar declined to elaborate on Kuwait Finance's strategy in Asia where it led a consortium that made a failed bid for Malaysia's RHB banking group, the country's fourth-largest lender.
Kuwait Finance's Malaysia-based branch operates autonomously, he said.
"They have their own board... We approved their strategy. They are accomplishing their strategy," he said. Kuwait Finance House has said it wants to work with the new owner of RHB.
Kuwait Finance House wants to expand into Indonesia, Japan or the Philippines either by setting up units or buying stakes in companies, Alam Alyawm newspaper reported on June 9.
Omar did not rule out acquisitions as part of the bank's Middle East growth strategy although organic growth would be a priority. "We do grow organically. We take a license and start setting up banks and do organic growth mostly," he said.
Kuwait Finance House, which offers consumer and corporate banking, is considering applying for licences in Saudi Arabia, Qatar and Oman, Omar said.
"It's a natural expansion for us, we have the same culture, the same language. It's a place where we find ourselves in the same platform with others and understand the competition," he said of Gulf markets. In the Gulf, Kuwait Finance House already has a unit in Bahrain offering services such as private equity deals. It also operates in the United Arab Emirates through a 20 percent stake in Sharjah Islamic Bank.
Kuwait Finance is starting a $200 million investment subsidiary in Turkey and is also setting up shop in Morocco to tap the North African market.
"We had just initiated the process of establishing an investment company in Morocco," Omar said.
The Kuwait Finance House offer of shares at 1 dinar ($3.47) to each existing shareholders, raising it capital by 22 percent, closed on June 11. The bank hoped to raise 306.3 million dinars.
The stock ended 0.74 percent lower on June 15 at 2.680 dinars.
The government is the biggest shareholder in Kuwait Finance House, owning a 49 percent stake. The government is also setting up Jaber Islamic Bank, a third lender that complies with Sharia or Islamic law, and got parliamentary approval for its plan this month.
Operating under Islam's ban on lending on interest, Kuwait Finance makes money by sharing profit from Sharia compliant investments such as real estate or the automotive rental companies.
In Kuwait, the bank plans to raise the number of branches to 50 by year-end from 44, as demand for services such as mortgages rises, Omar said.