Serving Kuwait for 60 Years - National Bank of Kuwait

Serving Kuwait for 60 YearsSpecial Edition on the 60th Anniversary of NBK(1952-2012)

من وثائق اخلارجية البريطانيةبتاريخ 6 ابريل 1952

3Need for a National Bank...Before 1952 there was only one bank operating in Kuwait: the British Bank of the Middle East, which had beeninaugurated in 1942 during World War II. In 1949, the management in Kuwait became increasingly aware thatKuwaiti citizens were dissatisfied with the level of service they were receiving from the bank. Their needs were notbeing met. Kuwaiti merchants were unhappy at being treated as second class customers.In a now celebrated incident, a prominent Kuwaiti merchant was surprised and shocked to have his request for aloan of 10,000 rupees turned down. He was told he needed to provide a guarantor. News quickly spread all overtown.This rejection drove him to go see the Amir, along with a group of other prominent merchants. They describedthe discriminatory treatment they received at the hands of the bank. They asked his permission to set up a newbank, a national bank with their own capital. The Amir readily pledged his support.They agreed that the new bank should serve the national interest, contribute to economic growth and take goodcare of customers’ deposits.Serving Kuwait for 60 years

The decree dated 19 May 1952announcing the establishment ofthe National Bank of Kuwait

5The Establishment of NBK...On 19 May 1952 the Amir of Kuwait, Sheikh Abdullah Al Salem Al Sabah, issued an Amiri Decree setting up theNational Bank of Kuwait. It was to be the first local bank and the first shareholding company not only in Kuwaitbut in the entire Gulf region.The bank’s aims and objectives were further broadened in a Memorandum of Association, along with itsamendments, effective from 15 April 1961.The following pages are a unique record of the bank’s history from its modest beginnings to the regionalpowerhouse it is today. It started in premises no greater than three shops. A handful of employees relied onprimitive banking tools. Everything was done by hand. Today it is one of the largest, safest and most profitablebanks in the region. It has a huge international network, with branches, representative offices and subsidiaries inthe world’s most important business and financial centers.Serving Kuwait for 60 years

Khalid Al-Zaid Al-KhalidAhmed Al-Saud Al-KhalidKhalifa Al-Khalid A-GhunaimYousef Abdulaziz Al-FulaijSayed Ali Sayed SuleimanKhalid Abdullatif Al-HamadYousef Ahmed Al-GhanimMohamed AbdulmohsenAl-KhurafiAbdulaziz Al-Hamad Al-SagerThe Founders

7Difficulties Faced by the Founders...The road was not easy for the founders of NBK. They were faced with many obstacles. These began when theideas for the bank were still on the drawing board. The founders managed to overcome these obstacles throughtheir own determination and wise judgement and thanks to the support of the Amir of Kuwait, the late SheikhAbdullah Al Salem Al Sabah. It has since been a story of glorious success and dazzling achievements even in timesof adversity.The prominent Kuwaitis who met the Amir on that auspicious occasion to present their proposals for establishingthe bank were:• Khalid Al-Zaid Al-Khalid• Khalifa Al-Khalid A-Ghunaim• Sayed Ali Sayed Suleiman• Yousef Ahmed Al-Ghanim• Abdulaziz Al-Hamad Al-Sager• Ahmed Al-Saud Al-Khalid• Khalid Abdullatif Al-Hamad• Yousef Abdulaziz Al-Fulaij• Mohamed Abdulmohsen Al-KhurafiThe first obstacle they faced was Article 18/B of the Memorandum of Association of the British Bank of the MiddleEast which was signed by the Kuwaiti government. This had protected the British Bank of the Middle East and givenit a monopoly by agreeing that no other bank could be established in Kuwait. The Amir ruled that he could not stopthe opening of a national bank in the country and he granted his approval to the new venture.Serving Kuwait for 60 years

9The decision aroused the interest of the British representative in Kuwait because of the competition it posed tothe British Bank of the Middle East. Confidential British Foreign Office documents, since released into the publicdomain, described the support given by the Amir and his negotiations with the British to overcome the obstaclesto establish the bank.On 19 May 1952 the National Bank of Kuwait was established. All the directors on the board, the shareholdersand the founders were leading Kuwaiti merchants. The bank had a start-up capital of 13,100,000 rupees,equivalent to one million Kuwaiti dinars divided into 13,100 shares of 1,000 rupees each.Serving Kuwait for 60 years

The minutes of the first meetingof the Board of Directorsdated 8 August 1952

11Cornerstone...With the support given by the Amir, the founders of NBK made the first executive decisions for the bank to startoperating. They hired a qualified and experienced British banker to manage the bank. They recruited the firststaff. They rented premises in a suitable location and installed the furniture and equipment they needed.On 15 November 1952, NBK was officially inaugurated as a shareholding company with a mission to carry outstandard banking activities. It was the birth of the first national bank and the first shareholding company inKuwait and the Gulf.Serving Kuwait for 60 years

British Foreign Office cabledated 9 October 1952

13The Journey Begins...NBK opened its doors for business for the first time in a small building on New Street, in the heart of Kuwait’scommercial district. It had only a handful of staff that started with basic banking activities like supplying creditto commercial customers, currency exchange, and ordinary cash transactions: taking deposits and allowingwithdrawals.Over time, NBK quickly showed its professionalism and capability in its contribution to the development ofKuwait. NBK provided the complete range of services to private customers and corporate clients alike. It financedinfrastructure projects that began in the 1950s as the nascent state broke free from decades of British dominationinto a new era of freedom and economic independence. This new sense of economic independence spread inturn to the region _ something that might not have happened if it were not for the farsightedness and driveof those Kuwaiti merchants and the unstinting support of the Amir who laid the foundations of the Kuwaiticonstitution and the evolution of Kuwait.Serving Kuwait for 60 years

Kuwait in the 1950s

15Serving Kuwait for 60 years

NBK opens for business:15 November 1952

17At the Heart of Kuwait’s Development Era...NBK twice played a key role in the replacement of Kuwait’s local currency. First, in May 1959, when the Indianrupee was replaced by what became known as the Gulf rupee. And again in 1961 when the Monetary Councilwithdrew the Gulf rupee and introduced the Kuwaiti dinar as the unit of exchange of the newly independent andsovereign state of Kuwait and asserted control over its fiscal affairs.During the 1970s, NBK continued to finance major projects in infrastructure as the state used its oil exportrevenues for national development and modernisation. It contributed to projects including desalination plants,power stations, roads and bridges, oil field expansion and refining capacity, hospitals and schools _ all projectsbuilding Kuwait’s future.This was NBK’s growth period. The bank grew in size and underwent its own development, restructuring andorganisational changes to respond to the challenges and demands of the booming economy.Serving Kuwait for 60 years

A historic photograph of the first daythe bank opened for business,15 November 1952

19True Value During Crisis...The 1980s posed very serious challenges to the banking system in Kuwait and NBK proved its worth. It supportedthe economy of the state in good times and bad. In the collapse of the banking system in 1982 triggered bythe Souq Al-Manakh crisis, NBK alone was able to weather the storm thanks to its responsible, balanced andconservative attitude towards risk.NBK had issued reports and other publications prior to the collapse warning of the impending dangers of a crash.1983 was another milestone in the bank’s history. For the first time in thirty years, the bank appointed an Arab torun the bank when Ibrahim Shukri Dabdoub was made CEO.NBK rose to the next major challenge after Iraq invaded Kuwait in 1990. The bank transferred its operationsabroad and continued to function as best as it was able. It met all its commitments to clients and otherinternational banks. NBK also played a major role in funding reconstruction projects in Kuwait after its liberation.The bank’s outstanding performance in these two crises bolstered its reputation for reliability and trustworthinessboth at home and abroad.Serving Kuwait for 60 years

A group shot of the first NBK team,dated spring 1953

21Fuelling the Kuwaiti Economy...The liberation in 1991 demanded different services and during the 1990s NBK was able to extend and managehuge loans including one of $5.5bn to the government of Kuwait, the largest ever loan at the time in the Arabworld. Another very large piece of financing was a $1.25bn loan to the Equate petrochemicals joint venture.The 1990s were a golden era for the bank. It was a period of development and great prosperity throughoutthe region and the wider world. NBK expanded. The bank now has more than 67 branches in Kuwait as wellas branches, representative offices and subsidiaries in New York, London, Paris, Geneva, Singapore, Turkey andChina as well as Egypt, Lebanon, Bahrain, Jordan, Qatar, the UAE, Iraq and Saudi Arabia.Today, in the second decade of the 21st century, NBK is comfortable performing on the world stage as a leadingfinancial institution offering comprehensive banking services to private and corporate clients, always true to itsheritage of safety first.Serving Kuwait for 60 years

NBK opened its first stand-alone Head Office building in Al Mubarakiya in 1963. The opening ceremony was attended by the foreignminister Sheikh Sabah Al Ahmed Al Jaber Al Sabah, who later became the Amir of Kuwait, and the finance minister the lateAmir Sheikh Jaber Al Ahmad Al Jaber Al Sabah and other distinguished representatives of leading merchant families in Kuwait.

23Serving Kuwait for 60 years

The entrance of the New Street branchfrom Safat Square, NBK’s first home

25The Highest Credit Rating...Despite the succession of crises, NBK has continued to hold the highest ratings from credit rating agencies of anybank in the Middle East. Recently, Standard and Poor’s affirmed NBK’s long term credit ratings of A+ based onstrong capitalisation, a stable management team and sound earning generation capabilities. The agency also citedthe consistently held leading market position and NBK’s outperformance of its peers in crises. NBK is rated AA- byFitch and Aa3 by Moody’s, and all ratings carry a stable outlook.NBK and Financial Crises...NBK proved its perseverance not only in the Souq Al-Manakh crisis and after the Iraqi invasion. It also demonstratedthe bank’s fundamental strengths in response to difficult financial markets during the Asian market collapse, theglobal financial crisis and the Eurozone debacle. NBK not only survived but continued to operate profitably in excessof all expectations thanks to the conservative policy of the bank with regard to risk management, its clear strategicvision and its experienced and stable management.The Safest Bank...NBK has long been recognized for its excellent management and record for sound banking practices. It prides itselfon its rigorous risk management and its fiscal conservatism, as a place where depositors can feel secure in theknowledge that their investments are in safe keeping. The bank’s success rests on the very solid foundation of a verysound system of managing risk and of corporate governance. NBK is the only bank in the Middle East to be chosenby Global Finance among the world’s safest 50 banks for five consecutive years.Serving Kuwait for 60 years

القاعة املصرفية لفرع املركز الرئيسي لبنك الكويت الوطني في منطقة املباركية عام 1963

The main banking hall at Head Office in Al Mubarakiya in 1963