Kuwait has grown so far and so fast since the middle of the 20th century that it is difficult to imagine the small city and nation Kuwait once was. A glance across today’s high-rise skyline or a drive along any downtown street will bear witness to the way banking shapes and influences the architecture of the city as well as our personal and business lives. It is difficult to comprehend that within the early lifetime of many of our citizens Kuwait did not have a bank to call its own.
There would be many obstacles to overcome before a Kuwaiti bank could be established and it is fair to say that, initially at least, the British (for whom Kuwait was of extreme strategic importance and under whom Kuwait was administered as a protectorate at the time) showed reticence at the idea of Kuwait establishing its own national bank.
In April 1952 a group of prominent citizens met with His Highness the Amir Sheikh Abdullah Al-Salem Al-Sabah in order to present their proposal for a national bank. The group, including Khalid Al-Zaid Al-Khalid, Khalifa Al-Saud Al-Khalid, Khalifa Khalid Al-Ghanim, Khalid Abdulatif Al-Hamad, Said Ali Said Suleiman, Yousef Abdulaziz Al-Fleij, Yousef Ahmed Al-Ghanim, Mohammed Al-Abdulmohsin Al-Kharafi, and Abdulaziz Al-Hamad A-Saqer, received the support of His Highness Sheikh Abdullah Al-Salem Al-Sabah.
Although Article 18/B of the memorandum of association of the British Bank of the Middle East with the Kuwaiti government specifically stipulated that no other banks could be established in Kuwait, thereby offering the British Bank a high degree of protection, HH Sheikh Abdullah Al-Salem Al-Sabah believed that this could not prohibit the opening of a national bank in the country.
On 19th May, 1952, with the support of HH Sheikh Abdullah Al-Salem Al-Sabah and an Amiri Decree behind it, the National Bank of Kuwait was established with a capital of 13,100,000 rupees (equivalent to one million Kuwaiti Dinars). The capital was divided into 13,100 shares each one being worth 1,000 rupees. Not only did NBK open as Kuwait’s first bank, it also stood as the first national bank in the Gulf region, and it also became Kuwait’s and the Gulf’s first share-holding company.
In a small building on Al-Jadeed Street, in the heart of Kuwait’s commercial district, NBK opened its doors for the first time on 15th November, 1952. Through its establishment of commercial credits, currency exchange, and regular banking transactions, NBK soon proved its importance as a contributor towards the development of Kuwait.
Throughout the 1950s, as a new era of economic freedom and independence began in the State of Kuwait, NBK offered support and assistance to individuals and businesses and well as funding for infrastructure projects. The establishment of NBK provided a spark of economic independence that fueled the nation’s growth through the succeeding decades. Had it not been for the initiative of Kuwait’s merchants of the late-1940s and early-1950s the course of Kuwait’s economic growth might have emerged rather differently.
Throughout its history NBK has maintained a key role at the heart of Kuwait’s commercial society. Twice it played a major role in replacing the local currency; once in 1959 when the Indian rupee was replaced by what became known as the Gulf rupee, and again in 1961 when the Kuwait Monetary Council withdrew the rupee in favor of the Kuwaiti dinar.
Kuwait continued to grow as an independent state and NBK continued funding of infrastructure and development projects to build the country. These projects have included desalination plants, electricity plants, road networks, building and developing oilfields and refineries, building hospitals and schools, and supporting construction development - all of which have opened windows to the future of Kuwait.
NBK has remained faithful to the Kuwait economy through good times and bad. In 1982, when the Kuwait Stock Market suffered what became known as the Souk Al-Manakh crisis, the balanced and conservative work of NBK resulted in it being the only bank that was not adversely affected by the crash.
Indeed, prior to the crisis NBK had warned several times of such a crash occurring. 1982 also marked another significant event in the history of NBK. For the first thirty years of its life NBK engaged respected and experienced non-Arabs in the role of General Manager. This time though NBK would appoint Ibrahim Shukri Dabdoub, who first joined NBK in 1961, as the first Arab CEO of the National Bank of Kuwait.
In 1990, when Kuwait was invaded by Iraq, NBK continued executing its work outside Kuwait and met all its commitments towards clients and banks abroad. The bank also played a major role in funding reconstruction projects in Kuwait. During this period NBK proved itself an unrivalled partner to the people and the government of Kuwait. The National Bank of Kuwait saw itself managing huge loans after liberation, including a loan to the Kuwait government of US$5.5 billion - at the time this was the largest loan ever granted in the Arab region. NBK also granted the petrochemical company Equate a loan of US$1.25 billion.
The 1990s represent a golden era for the bank. During this period development and prosperity prevailed regionally and internationally. Today, the bank has more than 70 branches in Kuwait as well as branches and representative bureaus and external companies in New York, London, Paris, Geneva, Singapore, Vietnam, Turkey and China as well as Egypt, Lebanon, Bahrain, Jordan, Qatar, the UAE, Iraq and Saudi Arabia.
As we enter the second decade of the 21st century, and Kuwait enters its second half-century of independence, the National Bank of Kuwait sits comfortably on the global financial stage.
The bank retains the highest credit classification amongst Middle Eastern banks, indeed Standard and Poor’s has confirmed its long term credit classification for deposits in the local currency at A+ based on the strong capital situation of the bank as well as its solid operational performance and risk management. The National Bank of Kuwait was the only Arab bank chosen by Global Finance as one of the fifty safest banks in the world during 2009 and 2010.
All-in-all not a bad performance for a bank opened less than 60 years ago out of frustration with the service its people were receiving from a foreign bank operating within their city. Not bad at all.
First published in Men's Passion issue #28 February 2011