NBK is Kuwait’s largest bank, with a 30% market share of both system assets and customer deposits, total assets of $19.8 billion and equity of $1.9 billion, as of end-June 2004. Despite operating in a volatile region and in a country primarily dependent on oil production, under strong management and with committed shareholders, it has developed gradually since its establishment in 1952 to become a major regional player with a significant international presence. NBK’s main businesses are retail, private, corporate and investment banking as well as asset management. Its key strategic goal is to strengthen its regional and international position by providing a broad range of high-quality client services based on advanced banking technology and professional management. Historically a universal bank, NBK now focuses on expanding its corporate franchise into the retail area which offers higher growth and profitability potential. It is also seeking to expand within the Arab world, recognizing its dominant position in Kuwait’s small banking industry and seeking growth and risk-diversification opportunities in less well-developed markets. The NBK group includes NBK Suisse S.A. (based in Geneva), NBK International plc (a wholly-owned subsidiary based in London with a branch in Paris), branches in New York, Singapore and Bahrain, representative offices in Thailand and Vietnam, and a majority stake in National Bank of Kuwait in Lebanon. Most recently, it has acquired banking licenses in Saudi Arabia and Jordan. Importantly, NBK was one of three international banks (with HSBC and Standard Chartered) selected in January 2004 for the award for the first foreign bank licenses in Iraq. NBK is also part of the consortium managing the Trade Bank in Iraq. NBK is currently rated A+ by Fitch, A2 by Moody’s and A by Standard & Poor’s, all with a stable outlook. NBK was established by a group of prominent Kuwaiti merchant families who still control some 80% of the bank's shares, with the other 20% publicly traded on the Kuwait Stock Exchange. No shareholder has a stake of more than 5%.

The total project cost is estimated at approximately NID 50 billion (around $35 million at current exchange rates). The proposed IFC investment is an equity investment for up to $5 million for its own account.

5.0 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan
Equity	5.0

* These investment figures are indicative

CBI is headquartered in Baghdad and operates a network of 12 branches, 9 of which are in the capital. NBK/IFC’s investment plan envisages a significant expansion of the, with ultimately up to 55 outlets nationwide.

The project is expected to have a significant developmental impact by contributing to economic development in Iraq in four ways: - Transformation of a Financial Institution: Through the partnership between NBK and IFC, the investment will aim to transform CBI’s outdated and inefficient operations, developing a sustainable business model and strategy and bringing the bank into line with international best practices. By implementing improved corporate governance, anti-money laundering and environmental/social practices, CBI will seek to establish an important benchmark for the post-conflict development of the nascent Iraqi private banking industry. The co-operation of a reputable local bank with premier international financial institutions should provide an excellent precedent for the re-integration of Iraqi banks into the global capital markets. - Extension of Finance to Previously Underserved Groups: The increase of CBI’s capital will be a significant source of medium-term finance for private enterprises, including many SMEs, thus encouraging investment, growth and job creation. - Improvement of Financial Infrastructure: By seeking to implement best international banking practice, CBI will over time promote the improvement of financial sector infrastructure institutions and processes, e.g. clearing & settlement systems, trading systems, rating and information agencies, etc. - Development of Regional Financial Markets: By assisting NBK’s strategic entry in Iraq, the project complements the bank’s major plans for expansion in the Middle East, in turn contributing to the further development of sophisticated capital markets in the region. IFC’s role in this project is summarised below: - Demonstration Effect: By taking a significant equity position in CBI, IFC will signal its strong support for Iraq’s nascent private banking sector. - Reconstruction: By strengthening CBI’s capital base and helping it implement an accelerated growth strategy, IFC will help improve the access of Iraqi private enterprises engaged in reconstruction work to long-term and working capital funding. - Best Practice in Corporate Governance and Environment: IFC will work with NBK to introduce and implement a sound system of corporate governance, policies and procedures on Anti-Money Laundering and Combating the Financing of Terrorism, setting a benchmark for the entire sector. Furthermore, IFC will aim to increase CBI’s awareness of social / environmental issues and promote the introduction and implementation of an environmental management system.

This is an FI type 1 project. Post-acquisition, CBI will be required to establish an environmental management system to ensure that its relevant operations meet Iraqi and applicable IFC environmental and social requirements. IFC will assess CBI''s capacity to establish an EMS.
Location of environmental documents in locally affected community