KUWAIT Trends and Developments Contributed by: Yousef Al Shereedah, Abdulrahman Al-Roumi and Bashayer Al-Tuwais, International Counsel Bureau – Lawyers and Legal Consultants
the country. Additionally, it instructed banks not to recognise virtual assets as investments or provide investment-related services for virtual assets. The CBK also confirmed that it will not license any potential provider wishing to engage in virtual asset services. While not triggered by a change in policy or reg - ulation, there appears to be a regulatory trend for the limited number of local banks to merge with one another. The flagship merger between KFH and AUB appears to have signalled to the market that consolidations are a good idea and supported by a permissive regulatory environ - ment. In 2024, Boubyan Bank and Gulf Bank announced a merger which would see Gulf Bank’s conventional banking services turned to services strictly provided in a sharia compli - ant way. This potential merger would create an Islamic financial institution with around USD53 billion in assets and a 15% market share.
Kuwait’s banking regulatory landscape in 2023 and 2024 has evolved in response to both global and domestic factors. The CBK has taken steps to manage inflation through monetary policy while advancing regulations that address critical issues such as financial inclusions, ESG princi - ples, and cyber security. The ongoing bank con - solidations, including the landmark KFH-AUB merger and the potential Boubyan-Gulf Bank merger, reflect a shift towards creating larger, more competitive institutions in an increasingly digital-driven market. These developments, coupled with the government’s strategic legis - lative efforts, particularly around the Public Debt Law and potential new taxation, signal a future where regulatory reforms will continue to shape Kuwait’s financial sector. The CBK’s focus on innovation, particularly through its regulatory sandbox, will likely drive further advancements in fintech, microfinancing, and digital services, ensuring that Kuwait remains at the forefront of financial modernisation while balancing con - sumer protection and market stability.
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