Warba Bank (K.S.C.P.) Shareholders Public Subscription Prospectus In the Share Capital Increase

Transcription

1 (A Public Shareholding Company Incorporated in the State of Kuwait) Warba Bank (K.S.C.P.) Shareholders Public Subscription Prospectus In the Share Capital Increase Subscription Period From 25 th November 2018 to 27 th December 2018 Date of Subscription Prospectus 20 th November 2018

2 Table of Contents Background... 3 Notice to Potential Investors... 5 Liability Statement... 6 Legal Advisor s Declaration... 6 Important Notices... 7 Summary of the Offering... 9 Subscription Terms, Conditions & Instructions Basis of calculation of share price and premium The Use of Proceeds Information about the Issuer Risk Factors Appendices Warba Bank (K.S.C.P.) Shareholders Public Subscription Prospectus in the Share Capital Increase Page 2 of 52

3 Background Warba Bank (K.S.C.P) ( The Bank, Warba or Issuer ) was established in the State of Kuwait on 17 th February 2010 by virtue of the Amiri Decree No. 289/2009. The Bank is registered at the Ministry of Commerce & Industry under No and listed in Kuwait Stock Exchange ( Boursa Kuwait ). The Issuer s share capital at the date of this Subscription Prospectus ( Prospectus ) is KD 100,000,000 (Kuwaiti Dinars One Hundred Million) allocated to 1,000,000,000 shares (One Billion Shares), 100 Fils (One Hundred Fils) per share ( issued shares ) all paid in cash. The new share capital increase offered for subscription ( Issue /Offering ), whose provisions include preemption right as herein defined, shall be composed of 500,000,000 (Five Hundred Million) ordinary shares ( Issue/Offering Shares ) at issue price of 180 Fils (One Hundred and Eighty Fils) per share ( Issue/Offering) Price ) of which 100 Fils nominal value and 80 Fils (Eighty Fils) share premium. The Issue represents increase in the total authorized and issued shares from 1,000,000,000 (One Billion) shares to 1,500,000,000 (One Billion and Five Hundred Million) shares at an increase of 50% (Fifty Percent) of the Bank s current authorized and issued capital. Shareholders ( Eligible Shareholders ) whose names are recorded in the Bank s Shareholders Register kept at Kuwait Clearing Company ("Clearing & Depository Agent") at the close of Bursa Kuwait Trading Day i.e. 21 st November 2018 ("Record Date" or Eligibility Date ) shall have the pre-emption right in the subscription (during the period designed for exercising the pre-emption right) on the issue shares each pro-rata his/her/its shareholding percentage ("the pre-emption right"). For clarity, any trading made on the Bank's shares prior to the record date but for which the settlement process has not been completed at Boursa Kuwait on the record date ("the Ex. Date / Cut off Date of Pre-emption Right " or "the date of trading on the Bank s shares without having the pre-emption right") and accordingly not recorded in the Bank's Shareholders Register, shall not be taken into account in defining the eligible shareholders recorded in the Bank's Shareholders Register on the Record Date. Each eligible shareholder may subscribe for 50% (Fifty Percent) of the issued shares registered in the name of the eligible shareholder on the record date. The Issue Shares shall be allocated to eligible shareholders underwriting for subscription (during the period designated for exercising the Pre-emption Right) at a number of issue shares equals 50% (fifty percent) of the shares held in the name of the shareholder on the record date. The remaining unsubscribed issue shares, if any, shall be allocated to eligible shareholders that subscribed for additional number of issue shares exceeding the amount allocated for them (See Subscription Terms, Conditions & Instructions Section). In case the total issue shares is not covered during the period allocated to exercising the pre-emption right, the issue shares shall be open for public subscription/offering to nonshareholders in the remaining number of shares from the period allocated for exercising the pre-emption right. The number of shares shall be rounded to the nearest whole number. The issuer shall have the absolute right to dispose of the fractional shares, if any, without issuing fractional shares. (After the completion of the offering, the authorized and issued share capital of the Bank will be KD 150,000,000 (Kuwaiti Dinars One Hundred and Fifty Million) allocated to 1,500,000,000 (One Billion and Five Hundred Million) shares. The total value of the offering shall be KD 90,000,000 (Kuwaiti Dinars Ninety Million) in cash ( Issue Proceeds ). The issue proceeds will be used to enhance the Bank's capital base in accordance with Basel III Capital Adequacy Standards and for the Bank's general objectives (see Use of offering Proceeds" section). In case of non-subscription for all new shares, the remaining shares shall be disposed of in accordance with the Companies Law No. 1 of 2016, as amended and its executive regulations. The share allocation decision shall be final without any liability on the issuer. In the meeting dated 11/4/2018, the Bank s Board of Directors recommended increasing the Bank s authorized, issued and paid up capital from 100,000,000 (Kuwaiti Dinars One Hundred Million) to KD 150,000,000 (Kuwaiti Dinars One Hundred and Fifty Million) by issuing and allocating 500,000,000 (Five Warba Bank (K.S.C.P.) Shareholders Public Subscription Prospectus in the Share Capital Increase Page 3 of 52

4 Hundred Million) shares at 180 Fils (One Hundred and Eighty Fils) per share (including share premium), after obtaining the necessary approvals from regulatory authorities and the Bank s General Assembly. The Bank s Sharia Supervisory Board has perused the recommendation of the Board of Directors to increase the Bank s authorized, issued and paid-up share capital by 50% (Fifty percent), i.e. from one billion shares to one billion and five hundred million shares at issue premium of 80 (Eighty) Fils per share, added to the nominal value of 100 (One Hundred) Fils all paid in cash by issuing new shares for public subscription/offering allocated to existing shareholders recorded in the Bank's registers as on 21 st November 2018 (The Record Date), each shareholder according to his/her/its shareholding percentage in the Bank s share capital. Subscription may be exercised by the Bank s shareholders for shares not subscribed for. If applications for subscription exceed the number of shares offered for subscription, these shares shall be allocated to subscribers according to their percentages in subscription. In all cases where subscription for new shares is not exercised, unsubscribed shares shall be disposed off under law; The Board of Directors shall be authorized to call for capital increase and determine all controls, rules, terms and conditions of subscription and disposition of share fractions, if any. Following perusal of the subscription prospectus, the Sharia Supervisory Board has decided that there are no Sharia impediments for increasing the Bank s share capital as set forth in the subscription prospectus. Kuwait Capital Markets Authority CMA and the Central Bank of Kuwait CBK for the units under its supervision are the regulatory bodies responsible for issuing licenses and the approvals necessary for issuing securities in Kuwait. This prospectus has been prepared in accordance with the provisions of CMA law No.(7) of 2010 Concerning the incorporation of Capital Markets Authority and the Regulation of Securities Activities as amended and the Executive bylaw thereof. On 20 th June 2018, CBK approved Warba Bank's application to increase its share capital by 50% through issuing new shares to be offered for public subscription. The issue premium of 80 (eighty) Fils per share will be added to the 100 (one Hundred) Fils nominal value. In addition, CMA approved on 29 th August 2018 the Bank s capital increase from KD 100,000,000 (Kuwaiti Dinars One Hundred Million) to KD 150,000,000 (Kuwaiti Dinars One Hundred and Fifty Million) at an increase of KD 50,000,000 (Kuwaiti Dinars Fifty Million) divided into 500 (Five Hundred) million shares at nominal value of 100 (One Hundred) Fils per share with issue premium. The increase shall be allocated to the Bank s shareholders each pro rata his/her/its shareholding percentage. The Bank s Extraordinary General Assembly Meeting approved the issue at its meeting on 31 st October Therefore, the Bank s Board of Directors approved, in its Meeting No. 38/2018 dated 31 st October 2018 to call for the share capital increase and authorize the Chief Executive Officer of the Bank to determine the subscription period for the share capital increase in the subscription prospectus and the schedule for the corporate actions. On 07 th November 2018, CMA approved on the subscription Prospectus and the offering of the share capital increase. The Issue/Offering Shares shall be of the same class as the existing shares in the issuer s capital. Each share shall confer its holder one vote and each shareholder ( The Shareholder ) shall be entitled to attend and vote in the General Assembly meetings. No shareholder shall have any additional voting rights in preference to any other shareholder. The shareholders of the issue shares shall entitled to their rights in future dividends whenever announced by the issuer. The Subscription Period for exercising pre-emption right in the issue/offering shares will commence on 25 th November 2018 for 15 days till 9 th December 2018 ( subscription period designated for exercising pre-emption right ). Subscribers may submit their subscription applications during the said period (see Subscription Terms, Conditions and Instructions section). In case shareholders do not subscribe in all shares offered for subscription, the share surplus will be offered for Public Subscription. The period designated for the Public Subscription in the share surplus shall commence from 16 December 2018 for twelve days till 27 th December In case all shares offered for Public Subscription are covered before the expiry of the cut-off date stated above, the subscription shall be closed. The Board of Directors shall Warba Bank (K.S.C.P.) Shareholders Public Subscription Prospectus in the Share Capital Increase Page 4 of 52

5 extend the subscription period at its absolute and sole discretion in accordance with applicable laws and regulations. After the subscription period, completion of the final allocation of the issue shares, fulfillment of all necessary regulatory procedures, the issue shares will be listed on the stock exchange for trading without any restrictions exactly the same as the issued shares. The Important Notices should be carefully studied before taking the decision to invest in the issue/offering shares. As per Law No. 7 of 2010 regarding the Establishment of the Capital Markets Authority & Regulating Securities Activities, without prejudice to the tax exemptions from the prescribed tax on profits arising from disposal of Securities issued by companies listed in the Exchange, returns in respect of Securities, bonds, financial Sukuk and all other similar Securities, regardless of the issuer, shall be exempted from taxes. Notice to Potential Investors We hereby advise you to seek the advice of a person licensed under law and specialized in providing advisory services on the contents of this prospectus prior to making the decision for underwriting in this subscription. It should also be noted that, without the prior approval of the Central Bank of Kuwait, the ownership of one person whether natural or corporate entity may not exceed 5% (five percent) of the Bank's capital, either directly or indirectly, Save for government agencies and entities with attached and independent budgets. If the ownership of one person exceeds the said percentage, that person should dispose off the increase within the period set by the Central Bank of Kuwait. This violation shall result in the shareholder not availing from the amount of share increase in terms of the voting rights in the Bank s General Assembly and in the Bank s management. The members of the Board of Directors, whose names appear under the ( Board of Directors Information ) Clause, shall - jointly and severally - assume full liability for the accuracy and integrity of the information contained in this document, and assure, to the best of their knowledge and belief and after conducting a full and detailed due diligence, that there are no other facts or information that the omission thereof may have impact on the accuracy and integrity of any statement set forth in this prospectus. The legal advisor of the Issuer certifies that the Prospectus and relevant documents have been reviewed and that, to the best of his knowledge and belief after undertaking all reasonable inquiries, the prospectus satisfy all relevant legal requirements and that the issuer has obtained all the approvals necessary for making the issuer s obligations valid, effective, binding and legally enforceable. Warba Bank, being the Issuer and the Issue Manager, declares that it assumes liability in the event that the information included in the Prospectus is incorrect and that, to the best of its knowledge after making all reasonable inquiries, the Prospectus has not omitted any material information and that it has been prepared based upon accurate and factual information. Capital Markets Authority ( CMA ) assumes no liability in respect of the contents of this Prospectus. It shall neither verify nor provide any declaration about its accuracy, integrity or completeness, and further abandons itself clearly and explicitly from any liability of whatever nature as a result of any loss that may arise or occur due to reliance on any portion of this Prospectus. Further, CMA shall not be a party to any claim in connection with any damages or harms arising from reliance on any portion of this Prospectus. This Prospectus was drawn on 20 th November Warba Bank (K.S.C.P.) Shareholders Public Subscription Prospectus in the Share Capital Increase Page 5 of 52

6 Persons Responsible for the Subscription Prospectus This Prospectus has been prepared by: Liability Statement Name: Shaheen H. Alghanem Position: Chief Executive Officer Address: Warba Bank (K.S.C.P), Sharq, Sanabil Tower, Floors 26, 27 and 28 P.O Box 1220, Safat Kuwait Declaration The aim of this Prospectus is to provide the information required to existing shareholders and new shareholders eligible to subscribe. The members of the Board of Directors, whose names appear under the ( Board of Directors Information ) Clause, shall - jointly and severally - assume full liability for the accuracy and integrity of the information contained in this document, and assure, to the best of their knowledge and belief and after conducting a full and detailed due diligence, that there are no other facts or information that the omission thereof may have impact on the accuracy and integrity of any statement set forth in this prospectus. The Board of Directors hereby confirms that, to the best of their knowledge and after undertaking all reasonable inquiries, that all the information set in the prospectus is complete, accurate and true, that the statement is issued after due diligence, that disclosure to investors is made of all information relating to the securities and the issuer for the purpose of deciding whether to underwrite in this subscription or not and that compliance is maintained with all relevant provisions stipulated under law No. 7/2010 concerning the Incorporation of the Capital Markets Authority and Regulation of Securities Activities, the Executive Regulation thereof issued under CMA Resolution No. 72/2015 as amended, the Kuwaiti Companies law No. 1/2016, the Executive Regulation thereof as amended and CMA /CBK regulations and Instructions. On behalf of the Issuer s Board of Directors: Name Abdulwahab Abdullah Al Houti Position Chairman Signature Legal Advisor s Declaration I, the undersigned, the legal advisor of the Issuer hereby certify that I have reviewed the Prospectus and relevant documents and, to the best of my knowledge after undertaking reasonable inquiries, that the prospectus satisfy all relevant legal requirements and that the issuer has obtained all the approvals required for making the issuer s obligations valid, forcible and binding. Name: Title: Signature: Melhem A.M. AlMelhem Acting Legal Manager Warba Bank (K.S.C.P.) Shareholders Public Subscription Prospectus in the Share Capital Increase Page 6 of 52

7 Important Notices This Prospectus includes information about Warba Bank K.S.C.P ("the Bank, "Issuer", "Warba" or "Warba Bank") in respect of the shares, subscription and subscription rules, terms and conditions. The Bank has not authorized any third parties for release, making or providing any representations or information regarding the Bank or the shares other than as set forth in this Prospectus or as approved for such purpose by the Bank. Any such information or representations should not be relied upon as having been authorized by the Bank as an issuer or Issue Manager save as stipulated herein. Whereas the Bank has made all reasonable enquiries as to the accuracy of the information contained in this Prospectus as at the date hereof, certain information about the market and industry sectors herein included have been derived from external sources. While neither the Bank, nor its respective advisers have any reason to believe that the market and industry information is materially inaccurate, such information has not been independently verified and no representation is made with respect to the integrity, accuracy or completeness of any such information. The information contained in this Prospectus as at the date hereof is subject to change. In particular, the actual financial position of the Bank and the value of the shares may be adversely affected by future developments due to inflation, financing charges, taxation or any other economic or political changes and other factors beyond the Bank s control. Neither the delivery of this Prospectus nor any verbal, written or printed interaction in relation to the shares is intended to be, or should be construed or relied upon in any way, as a promise or representation of any future earnings, results or events. This Prospectus should not be considered recommendation from the Bank or any of its advisers or affiliates to participate in the issue of the shares. The information provided herein is of a general nature and has been prepared without taking into account any potential investor s strategic objectives, financial situation or particular investment needs. Each recipient of this Prospectus shall be responsible for obtaining his/her/its own independent professional advice in relation to the Bank and the offering of the shares prior to making an investment decision. Further, the recipient of the prospectus shall be responsible for making his/her/its own independent evaluation of the Bank, investment in the shares and of the information and assumptions contained herein by seeking such advice, analysis and projections as he/she/it deems necessary in making any investment decision. Prospective investors should not construe the contents of this document as constituting tax, investment or legal advice. Prior to purchasing any shares, a prospective investor should consult a financial advisor licensed by Kuwait Capital Markets Authority along with his/her/its own legal, business and tax advisors to determine the appropriateness and consequences of investment in shares for such investor and arrive at an independent evaluation of such investment. The sole purpose of this prospectus is to provide background information about the Bank to assist each recipient of the prospectus in making an independent evaluation of the investment in these shares. No person has been authorized to give any information or make any representations in connection with the offering of the shares other than those contained in this Prospectus and, if given or made by third parties, any such information or representations should not be relied upon as having been authorized by the Bank as an Issuer or Issue Manager. Some statements in this Prospectus may be deemed to be forward-looking statements. Forward-looking statements include information concerning the Issuer s plans, objectives, goals, strategies, future operations and performance and the assumptions underlying these forward-looking statements. When used in this document, the words anticipates, estimates, expects, believes, intends, plans, aims, seeks, may, will, should and any similar expressions generally identify forward looking statements. The Issuer has based these forward-looking statements on the current view of the Issuer s Warba Bank (K.S.C.P.) Shareholders Public Subscription Prospectus in the Share Capital Increase Page 7 of 52

8 management with respect to future events and financial performance. Although the Issuer believes that the expectations, estimates and projections reflected in the Issuer s forward-looking statements are reasonable as of the date of this Prospectus, if one or more of the risks or uncertainties materialize, including those which the Issuer has identified in this Prospectus, or if any of the Issuer s underlying assumptions prove to be incomplete or inaccurate, the Issuer s actual results of operations may vary from those expected, estimated or predicted. These forward-looking statements speak out denotations only as at the date of this Prospectus. Without prejudice to any requirements under applicable laws and regulations, the Issuer clearly and expressly disclaims any obligations or undertaking to disseminate, after the date of this Prospectus, any updates or revisions to any forward-looking statements contained herein to reflect any change in the expectations thereof or any change in events, conditions or circumstances on which any such forward-looking statements are based. By reading and accepting this prospectus, the recipient agrees to comply with its conditions and declares that he/she/it is responsible for maintaining full compliance with laws in respect of any purchase including getting any necessary government or non-government approvals and satisfying any other requirements. Warba Bank (K.S.C.P.) Shareholders Public Subscription Prospectus in the Share Capital Increase Page 8 of 52

9 Summary of the Offering The following summary should be read as an introduction to, and is qualified in its entirety by reference to, the more detailed information appearing elsewhere in this Prospectus. This summary does not contain all the information that prospective investors should consider before deciding to invest in the Issue Shares and does not purport to be complete. Accordingly, any decision by a prospective investor to invest in the Issue Shares should be based on consideration of this Prospectus as a whole. Issuer Issuer s Address Nature of Offering Offer Price Nominal Value Issuance Premium Total number of Shares immediately prior to Offering Issuer s authorized, issued and paid up capital Treasury Shares Number and Nature of Issue Shares Number of offering shares undertaken to be subscribed Value of Undertaken Issue/ Offering shares Total number of shares immediately following the Offering Issuer s issued capital immediately following the Offering Warba Bank K.S.C.P (Kuwaiti Shareholding Company, Public) incorporated in the State of Kuwait on 17 February 2010 by virtue of the Amiri Decree No. 289 of Sharq Sanabil Tower Floor 26, 27 & 28 - Kuwait City Public Subscription in the Issue/Offering shares with pre-emption right to Eligible Shareholders at 50% (Fifty Percent) 180 fils (One Hundred and Eighty fils) per Share (including the nominal value and the issue premium). 100 (One Hundred) fils per Issue Share 80 (Eighty) fils per Issue Share 1,000,000,000 (One Billion) shares at nominal value of 100 fils each, all of which are fully paid KD 100,000,000 (Kuwaiti Dinars One Hundred Million) Nil 500,000,000 (Five Hundred Million) ordinary shares representing 50% of the Issuer s existing issued share capital. Nil Nil 1,500,000,000 (One Billion and Five Hundred Thousand) ordinary shares. KWD 150,000,000/- (Kuwaiti Dinars One Hundred and Fifty Million) Warba Bank (K.S.C.P.) Shareholders Public Subscription Prospectus in the Share Capital Increase Page 9 of 52

10 Percentage increase in issued share Capital The capital of the Issuer will be increased by KWD 50,000,000 (Kuwaiti Dinars Fifty Million) representing an increase of 50% in the Issuer s share capital immediately prior to the Offering. Total value of the Offering Restrictions on trading in securities offered for subscription and any future arrangements Offering/Subscription Expenses Offering/Subscription Method Offering/Subscription Period Offering/Subscription Period Allocated for Exercising Pre-emption Right Period for Public subscription in surplus shares Allocation date Eligible Shareholders (having Pre-emption Right to Subscribe in the Issue Shares) KWD 90,000,000 (Kuwaiti Dinars Ninety Million) Nil Offering Expenses are estimated to be approximately KD 200,000 (Kuwaiti Dinars Two Hundred Thousand). The Bank shall be responsible for all costs relating to the Offering, which includes subscription management fees, printing and publications expenses and other related legal notices. Subscribers may submit the subscription application online via the website for Subscription of up to 16,500 (Sixteen Thousand and Five Hundred) Shares or at the offices of the Clearing and Depositary Agent where Subscribers can submit the form prepared for subscription ( Subscription Application Form ) during the Subscription Period. Amendments to and/or withdrawal of the Subscription Application shall not be permitted once submitted. Upon submission, the Subscription Application shall represent a legally binding agreement between the subscribers and the Issuer. From 25 th November 2018 to 27 th December 2018 From 25 th November 2018 to 9 th December 2018 From 16 th December 2018 to 27 th December 2018 Within 5 working days of the end of the first or second subscription periods. Shareholders recorded in the Bank s Shareholder s Register at the Kuwait Clearing Company K.S.C. at the close of trading on Boursa Kuwait on the Record Date. i.e. Shareholders recorded in the Bank s Shareholders Register at Boursa as on 21 st November For clarity, any trading on the Bank s shares prior to the Record Date, but for which the trade settlement process at Boursa Kuwait have not been completed as of the Record Date (Ex Date), and as a result have not yet been recorded on the Bank s Shareholder Register, will not be considered in determining the Eligible Shareholders enrolled as of the Record Date. Warba Bank (K.S.C.P.) Shareholders Public Subscription Prospectus in the Share Capital Increase Page 10 of 52

11 Minimum Subscription Eligible shareholder options for the Issue shares Effect on Eligible Shareholders who choose not to subscribe in Issue Shares Subscription for Additional Issue Shares Public Subscription / Offering Allocation of Issue/Offering shares 1 (One) Share Eligible shareholders can exercise any of the following options in respect of the Issue Shares: (1) Exercising their pre-emption right in the Issue Shares; (2) Exercising their pre-emption right in the Issue Shares as well as subscribing for additional Issue Shares; (3) Assigning their pre-emption right for subscription in the Issue Shares as per the approved mechanism at least five days before the offering is closed (any such assignment shall be made in accordance with the relevant rules applied by the Clearing Agency), or (4) Not exercising any of the above options. Eligible Shareholders who do not subscribe to the Issue Shares shall be subject to a reduction in the proportion of their equity in the Issuer as well they may experience a change in the value of their Existing Shares, Eligible Shareholders have the right to subscribe for additional Issue Shares ( Additional Issue Shares ) in addition to their entitlement to Issue Shares under the pre-emption right. In case all shares offered for subscription are not covered during the period designated for exercising the pre-emption rights, the share surplus will be offered for Public Subscription where any subscriber may subscribe in the surplus issue shares. Allocation during the period designated for exercising the pre-emption right: Eligible Shareholders shall have the right to subscribe in any number of shares. However, exercising the Pre-emption right shall be limited to 50% (fifty percent) of the shares held by eligible subscriber as on 21 November The remaining surplus issue shares, as a result of some shareholders not exercising their pre-emption right, shall be allocated to eligible shareholders that subscribed for additional number of issue shares exceeding the amount allocated for them each pro rata to their subscription for the Additional Issue Shares in case of full coverage of the issue shares. Each subscriber will be refunded the amounts paid in excess of the shares actually allocated as per these rules. In case issue shares are not fully covered after the period designated for pre-emption right, subscription will be opened for public offering. Allocation during the Period for Public Offering to the surplus shares: During the subscription period, the Subscriber shall be entitled to subscribe to any number of shares he/she /it elects. Shares will be allocated to existing and new shareholders pro rata the number of additional remaining shares to the total number of subscribed shares. The number of shares allocated will be rounded to the nearest whole number. The Issuer reserves the right to dispose off the fractional shares. In case all shares offered for subscription are subscribed before the end of the period for Public Offering, the subscription will be closed. Warba Bank (K.S.C.P.) Shareholders Public Subscription Prospectus in the Share Capital Increase Page 11 of 52

12 In case subscription does not cover the entire issue shares, the remaining shares will be disposed off as per Kuwait Companies Law No. 1 of 2016 (as amended) and the Executive Bylaw thereof. The allocation of the Issue Shares shall be final without the least liability on the Issuer. Share Fractions Use of Offering Proceeds Excess Offering Monies Offering Terms Ownership Cap Dividends Voting Rights Short-Term Earnings per Share Share value in the event of liquidation of the Bank Subscription shall not be made for fractions of Issue Shares and, wherever necessary, the number of Issue Shares to which an Eligible Shareholder has a fractional entitlement shall be rounded to the nearest whole number. The Issuer shall have the sole right to dispose of the share fractions at its own discretion. Fractions for Issue Shares will not be issued in any way (Refer to Subscriptions Terms, Conditions and Instructions Section). The Offering proceeds will be used to enhance the Bank s capital adequacy ratio under Basel III framework and for the Bank s general objectives. Excess Offering Monies, if any, will be refunded to subscribers who have participated in the Offering without any profit, commission, charge or withholding by the Bank (Refer to Subscriptions Terms, Conditions and Instructions Section). The Rights of pre-emption in the Offering shall be exercised only by Eligible Shareholders. The Issuer and the Clearing and Depository Agent reserve the right to reject, in full or in part, any Subscription Application Form, which is not in compliance with the terms of the Offering. Once submitted, Subscription Application Forms cannot be amended or withdrawn. The acceptance of Subscription Application Forms by the Clearing and Depository Agent and the Issuer constitutes a binding agreement between subscribers and the Issuer (Refer to Subscriptions Terms, Conditions and Instructions Section). Pursuant to the Issuer s articles of association, any percentage of the Issuer s shares may be held by a shareholder at any time subject to compliance with all relevant ministerial resolutions and CBK instructions issued from time to time. Currently, the prior approval of the CBK is required, to hold title to more than 5% of the total shares issued in the share capital of the Issuer. Government entities and entities with attached and independent budgets are exempt from the cap The shareholder of the Issue Shares will be entitled to receive any dividends declared by the Issuer in future (same as issued shares). The Issuer has only one class of shares. Each Issue Share entitles the shareholder to one vote and has the right to attend and vote at the General Assembly meetings. No Shareholder has any preferential voting rights. The estimated earnings per share will be 6.5 fils for the fiscal year ended 31 December In the event of liquidation of the Bank and prior to the capital increase, the book value per share is 99 fils according to the financial statements for the year ended 31 December 2017 Warba Bank (K.S.C.P.) Shareholders Public Subscription Prospectus in the Share Capital Increase Page 12 of 52

13 Recover the value of shares Rights arising from the Issue Shares in the event of liquidation of the Issuer Process and Procedures in the event of undersubscribed share capital increase Listing of Shares Regulatory Authorities Auditors Existing and new shareholders can recover the shares value (either by profit or loss) through direct sale on Boursa Kuwait. There are no differences between the Issue Shares and Existing Shares with regard to any of rights. A Shareholder is entitled to receive a portion pro rata the shares he/she/it holds from the Issuer s assets on liquidation following repayment of the issuer s debts and other costs. If the share capital increase has not been fully subscribed during the Subscription Period, the Board of Directors of the Bank may decide to extend the Offering Period. If the share capital increase has not been fully subscribed during the extended offering period, the Board of Directors of the Bank may decide to either, (i) retract the share capital increase and refund the subscribers, or (ii) limit the share capital increase to the amount actually subscribed at the close of the subscription Period. Subscribers for the Issue Shares will not have the right of retraction except under Law. After the close of the Subscription Period, the final allocation of the Issue Shares and completion of all the necessary regulatory procedures, a statement of Issue Shares will be issued and the Issue Shares will be listed on Boursa Kuwait and will be set for trading without any restrictions. The new shares will be equal to the Existing Shares. Capital Markets Authority and the Central Bank of Kuwait. KPMG Safi Al-Mutawa & Partners Ernst & Young Al Aiban, Al Osaimi & Partners Issuer and Issue Manager Clearing and Depository Agent Law Courts Issuer s Board of Directors Warba Bank Kuwait Clearing Company K.S.C. Laws of the State of Kuwait Courts of the State of Kuwait Mr. Abdulwahab Abdullah Al-Houti Mr. Sami Fahad Al- Rushaid Mr. Ahmad Abdulaziz Al-Ghannam Mr. Abdulaziz Abdullah Al-Jaber Mr. Eid Nasser Al Rashidi Mr. Mohamed Riyad Al Mutawa Mr. Mohamed Abdulredha Saleem Mr. Musaab Omar Al-Fulaij Mr. Hani Abdulaziz Hussain Al -Terkait Mr. Hisham Abdulrazzak Al-Razzuqi Warba Bank (K.S.C.P.) Shareholders Public Subscription Prospectus in the Share Capital Increase Page 13 of 52

14 Subscription Terms, Conditions & Instructions Introduction The subscription shall be divided into two periods: The first period will be allocated to eligible shareholders to exercise their pre-emption right (shareholders recorded in the Bank s Shareholders Register at Boursa as on 21 November 2018). The second period shall be allocated for public subscription in surplus shares not subscribed during the period for exercising pre-emption right. In case all shares offered are subscribed for before the end of the public subscription period, subscription will be closed. In case of subscription to the entire shares during the exercise of pre-emption right, the subscription will be closed and the public subscription will not be undertaken. Subscription Instructions First: Subscription through the website: The website allows subscription in capital increase of 16,500 (sixteen thousand and five hundred) shares, equivalent to KD 2,970 (Kuwaiti Dinars Two Thousand Nine Hundred and Seventy) or less. Payment shall be made by K-NET service. The Subscriber shall: 1. Login to the website via the link: 2. Register the civil ID number, thus the system shall verify whether subscriber is eligible to the subscription or not (verification shall be conducted during the period of exercising the pre-emption right only). 3. Record the number of shares to be subscribed. 4. Be transferred to the payment portal via the K-NET service, where the subscriber can pay from his/her/its own account (no other person may pay on behalf of the Subscriber except in the cases provided for under law Required documents shall be reviewed when submitting the subscription application. The Subscriber shall bear all legal consequences in case of violation). Second: Subscription through referral to the clearing and depository agent "to subscribe in number of shares exceeding 16,500 (sixteen thousand and five hundred) shares": 1. The Subscriber shall log on the link to print the subscription information document, including but not limited to the name of the subscriber, the civil ID number, the number of shares to be subscribed and their value. 2. The Subscriber shall visit his/her/its own bank and submit a copy of the Subscription Document printed from the above link and transfer the amount required to the Bank Account (not profit bearing) to increase Warba Bank share capital of (net amount without any charges by the transferring bank and the receiving Bank) stated below: Name of Bank: Warba Bank Account number: IBAN: KW17WRBA Swift: WRBAKWKW Beneficiary: Warba Bank Capital Increase Reference / Description: Warba Bank capital increase + subscriber's ID number (civil Identity Card number) + subscriber's contact details (Telephone number) 3. The Subscriber shall get an original deposit voucher of the amount transferred from his own bank and then refer to the clearing and depository agent to complete the remaining procedures. Warba Bank (K.S.C.P.) Shareholders Public Subscription Prospectus in the Share Capital Increase Page 14 of 52

15 4. The Subscriber shall go to the headquarters of the Clearing and Depository agent located at the Arabian Gulf Street, Ahmad Tower, the Fifth floor to submit the documents listed in the «Documents Required when Submitting Subscription Application» in this prospectus during the evening period from 4 pm to 7 pm and fill in the subscription form. 5. The Clearing and Depository Agent shall provide the Subscriber with a deposit receipt of the Subscription. Failure of any Subscriber to submit a duly completed Subscription Application Form (together with all applicable supporting documentation thereto) at the offices of Kuwait Clearing Company, after the transfer or deposit of the Subscription Monies as required in this Prospectus, shall render the Subscription Application of a Subscriber null and void. Subscription monies shall not be accepted in cash. Subscription Application Form Subscribers that want to participate in the Subscription/Offering, can submit the Subscription Application Forms during the relevant Subscription Period at the offices of the Clearing & Depositary Agent. Each Subscriber must agree to the terms and conditions and provide all relevant information in the Subscription Application Form. The Issuer and the Clearing & Depository Agent reserve the right, free from any liability, to reject, in full or in part, any Subscription Application Form in the event any of the subscription terms and conditions are not satisfied, or the instructions are not duly and punctually followed including without limitation, failure of the Subscription Application Form to comply with the applicable laws and regulations, non-payment by the Subscriber of the full amount of the Subscription Monies, inaccuracy or invalidity of any information contained in the Subscription Application Form or failure of the Subscription Application Form to comply with or follow any terms or requirements set forth under this Prospectus or in the Subscription Application Form. Amendments to and withdrawal of the Subscription Application Form shall not be permitted once the Subscription Application Form has been submitted. Furthermore, the Subscription Application Form shall, upon submission, represent a legally binding agreement between the Subscriber and the Issuer. The Subscription Application Form and all relevant terms, conditions and undertakings shall be binding on the Subscribers and their assignees, executors, estate managers and beneficiaries, unless specifically stipulated otherwise in this Prospectus. The Subscriber must accept whatever number of Issue Shares is allocated to him/her/it provided such amount does not exceed the amount the Subscriber has indicated in his/her/its Subscription Application Form. The terms and conditions, and receipt of the Subscription Application Form and contracts arising therefrom shall be subject to the laws of the State of Kuwait and must be interpreted and applied in accordance therewith. All Subscribers must read the instructions relating to the subscription carefully before submitting the Subscription Application Form. Signing the Subscription Application Form shall be considered agreement to and acceptance of the Subscription Terms, Conditions and Instructions. The Subscription Application Form The subscriber shall specify in the subscription application the number of issue shares he/she/it intends to subscribe and transfer the full due amount of subscription. The subscriber shall apply the subscription form within the periods designated for subscription (the period allocated for pre-emption right and the period for public subscription in the share surplus). Warba Bank (K.S.C.P.) Shareholders Public Subscription Prospectus in the Share Capital Increase Page 15 of 52

16 Documents required when submitting the subscription applications The Subscription Application Form must be accompanied by the following documentation, as applicable. Staff at the offices of the Clearing and Depository Agent will compare copies with originals and return originals to the Eligible Shareholder: Individual subscribers Original and copy of the personal civil identification card; Original and copy of the passport for citizens of GCC states; Original and copy of special legal power of attorney for subscribing in shares (for subscribers using power of attorneys); Original and copy of Certificate of Guardianship for orphans; Original and copy of Certificate of Guardianship for minors; Original and copy of a Limitation of Succession Deed for inheritors. Original and copy of a trusteeship judgment. Corporate subscribers Original and copy of Commercial Registration Certificate; Original and copy of the Authorized Signatories Certificate or Extract of the Commercial Register as the case may be; Original and copy of the personal identification card of the authorized signatory; Original and copy of the specimen of signature for the authorized signatory issued by the Ministry of Social Affairs and Labor or attested by the Chamber of Commerce and Industry; and Letter issued by the authorized signatory on behalf of the entity authorizing the subscription. Non-Kuwaiti subscribers Non Kuwaiti subscribers (whether corporates or individuals (as applicable) are required to provide the equivalent of the aforementioned documentation as issued by their jurisdictional authorities if they do not have Kuwait issued documentation as highlighted further above. Without prejudice to the other grounds for rejection of the Subscription Application Forms, the Bank and the Clearing and Depository Agent shall have the right to reject the Subscription Application Form in the event the Subscription amounts are not received in full and credited to the subscription account at the time of submitting the Subscription Application to the Subscription Agent. Applicant Declarations By completing and submitting the Subscription Application Form, the Subscriber: agrees to subscribe to a number of Issue Shares set forth in the Subscription Application Form that is final and irrevocable; warrants that he/she/it has read and carefully studied this Prospectus and understands all of its contents; accepts the Memorandum and Articles of Association of the Issuer, all laws applicable on the ownership of the shares to be allocated by subscription and all of the subscription terms and conditions stated in this Prospectus; accepts that the Issuer and the Clearing and Depository Agent shall have the right to refuse any unsatisfactory, incomplete or unclear Subscription Application Form or for any of the reasons set forth in this Prospectus; Warba Bank (K.S.C.P.) Shareholders Public Subscription Prospectus in the Share Capital Increase Page 16 of 52

17 accepts the number of Issue Shares allocated to him/her it (to the maximum amount he/she/it has subscribed for) and all other instructions of subscription stated in the Subscription Application Form and this Prospectus; and undertakes that he will not cancel or amend the Subscription Application Form after submission to the Clearing and Depository Agent. the corporate subscriber declares, at its full responsibility, that it has obtained all the authorizations and consents required pursuant to its Memorandum and Articles of Association or pursuant to the law, in order to enable it to apply for the subscription and to perform its obligations in accordance to the terms and conditions contained in the Prospectus and to transfer its pre-emption right, including the consent of its Board of Directors or the General Assembly, as the case may be, in respect of shareholding companies. Pre-emption Right: The Pre-emption for subscription in the issue shares shall be restricted to the shareholders of the current issued shares recorded in the Bank s Register at the end of the Record Date 21st November 2018, i.e. Shareholders whose names are recorded in the Bank s Shareholders Register on the record date. For clarity, any trading made on the Bank's shares prior to the record date but the settlement process has not been completed at Boursa Kuwait on the record date and accordingly not recorded in the Bank's register of shareholders, shall not be taken into account in identifying the eligible shareholders recorded in the Bank's Shareholders Register on the Record Date. Each eligible shareholder may subscribe for 50% (Fifty Percent) of the issued shares registered in his/her/its name on the record date. Full or Partial Subscription to the Issue Shares An Eligible Shareholder who wishes to exercise his/her/its entire pre-emption right and subscribe to all Issue Shares to which he/she/it is entitled must complete the Subscription Application Form and submit it, together with the required documentation and payment of the full Subscription amount within the subscription period. Fractions of Shares may not be subscribed and, wherever necessary, the entitlement figure shall be rounded to the nearest whole number. Issue Shares not subscribed by Eligible Shareholders by the Record Date shall be allocated pro rata to other Eligible Shareholders who are enrolled on the Record Date and who submitted applications to subscribe to Issue Shares in excess of their entitlement on the basis of Existing Shares. Any Excess Offering Monies, if any, shall be refunded to the relevant subscriber after the allocation of the Issue Shares without any profits, commissions, and fees or withholding by the issue manager. If an Eligible Shareholder does not wish to exercise his/her /its right to the Issue Shares, he/she/it is not required to take any measures. If an Eligible Shareholder wishes to subscribe to some but not all of his/her /its entitlement to Issue Shares, he/she/it must submit a Subscription Application Form together with the other required documentation, and pay the Subscription Monies for the Issue Shares applied for during the Offering Period. An Eligible Shareholder may not subscribe in his/her /its entitlement to Issue Shares and to Additional Issue Shares more than once. For clarity, an eligible subscriber may subscribe once during the period of exercising the pre-emption right and another time during the public subscription, if any. Subscriber may not subscribe more than once during the public subscription period. In case of repetition during the same subscription period, all repeated subscription applications shall be excluded. Warba Bank (K.S.C.P.) Shareholders Public Subscription Prospectus in the Share Capital Increase Page 17 of 52

18 Eligible Shareholders Non-Subscription in the Issue Shares Eligible shareholders who do not participate in the issue shares during the period allocated for exercising the pre-emption right shall be subject to a decline in their ownership percentage in the Issuer's capital and may face changes in the value of their existing shares. Declining Subscription Forms The Issuer and the Clearing & Depository Agent reserve the right, without the least liability, to reject, in full or in part, any Subscription Application Form in the event: any of the forms are not compliant with the applicable laws, or any of the subscription terms and conditions are not met or the instructions are not duly and punctually followed including without limitation: A. mismatch between the amount paid and the number of required shares; B. if the application is not accompanied with a document evidencing the full payment of the subscribed shares, C. the subscriber does not pay the full subscription amount once at the time of submission of the Subscription Application Form; D. in the event of Bank Transfer for the Subscription, the application shall be rejected if the transfer is not executed within three working days from the submission date of the Subscription Application Form; E. the inaccuracy or the invalidity of any information contained in the Subscription Application Form or if the Subscription Application form is submitted more than once, F. failure of the Subscription Application Form to comply with or follow any terms or requirements set forth under this Prospectus or in the Subscription Application Form. In case there is any difference between the subscribers information/data and the information recorded at the Public Authority for Civil Information, The Issuer and the Clearing & Depository Agent shall have the right to discard these applications from the allocation process without any liability on the Issuer and the Clearing and Depository Agent unless the reasons for the difference are clarified and attached with the documents. Applications submitted by any means intended to conceal fictional or false subscriptions or otherwise shall not be accepted without the least liability on the Issuer and the Clearing & Depository Agent. Warba Bank (K.S.C.P.) Shareholders Public Subscription Prospectus in the Share Capital Increase Page 18 of 52

19 Subscription Allocation & Surplus First: Period allocated for exercising pre-emption right Eligible shareholders shall be entitled to subscribe in 50 % of the number of shares they actually possess. The remaining unsubscribed issue shares, if any, shall be allocated to eligible shareholders that subscribed for additional number of issue shares exceeding the amount allocated for them based on the number of issued shares owned by the eligible shareholder. In case, the additional unsubscribed issue shares are subscribed in excess of the available additional shares, the additional issue shares will be allocated to eligible shareholders as set forth herein. The number of allocated shares shall be rounded to the nearest whole number. The issuer shall have the absolute right to dispose of fractions of shares. In case eligible shareholders do not cover the issue shares, surplus shares shall be open for public subscription. Second: Public Subscription to the Surplus Shares During the public subscription period, the subscriber shall be entitled to subscribe to any number of shares he/she /it elects. In case, the total number of subscribed shares is less than the offered shares (i.e. remaining shares from the period of pre-emption right), the shares subscribed will be allocated in full. In case the number of shares subscribed is more than the number of offered shares (i.e. remaining shares from the period of pre-emption right), shares will be allocated to existing shareholders pro rata the number of additional remaining shares to the total number of subscribed shares. The number of shares allocated will be rounded to the nearest whole number. The Issuer reserves the right to dispose off the fractions of shares at its sole discretion. The issuer shall announce the final allocation of issue shares within five business days from the subscription closing date and refund any excess subscription amounts to the relevant Subscribers after allocation of the Issue Shares without any profits, commissions, fees or withholding by the issuer. It should be noted that no confirmations, representations or guarantees are given that there will be available any additional shares. Refund Amounts to Subscribers The Subscription amounts for declined applications and subscription surplus shall be refunded without profit, fees or deductions within 5 working days from the announcement of the allocation results by means of bank transfer to the designated account stated in the subscription application 9for subscribers through the clearing and depository agent) or issues of cheques (to the subscribers through the website ) to be collected from the headquarter of the Kuwait Clearing Company, Securities Depository Department Ahmad Tower. In the event of a cancellation of the subscription in full or in part, the Bank shall deposit any Subscription amounts in a non-profit-bearing account with the Bank until the repayment of such amounts to subscribers following the approval from the Ministry of Commerce and Industry. Convertibility of Issue shares The Issue Shares may not be converted into another form of securities. Warba Bank (K.S.C.P.) Shareholders Public Subscription Prospectus in the Share Capital Increase Page 19 of 52

20 Tradability of the Issue shares A statement of Issue Shares will be made and the Issue Shares will be listed on Boursa Kuwait following the close of the Offering Period, the final allocation of the Issue Shares and completion of all the necessary regulatory procedures. Issue shares will be traded without any restrictions equal to the Existing Shares. Expected Timetable Event Subscription commencement date for exercising 25th November 2018 pre-emption right Subscription close date for exercising preemption right 9th December 2018 Public Subscription commencement date for 16th December 2018 surplus shares unsubscribed by eligible shareholders Subscription Close date 27th December 2018 Allocation of Issue shares Within five working days from the subscription closing date Refunding subscription amounts to subscribers Within five working days from the subscription results announcement date Trading issue shares in Kuwait Stock exchange Will be listed in Kuwait Stock Exchange following completion of all necessary regulatory procedures. Date Warba Bank (K.S.C.P.) Shareholders Public Subscription Prospectus in the Share Capital Increase Page 20 of 52

21 Basis of calculation of share price and premium The Bank has appointed an independent asset valuer approved by the Capital Market Authority to assess the fair value of the net equities of Warba Bank for the purpose of share capital increase and for presenting an independent report to the Capital Markets Authority. Several valuation methods have been used, including discounted cash flow, market comparison and dividends discount model based on the audited financial statements of the Bank, Management historical information for past years from 2014 to 2017, as well as projected financial information prepared by Warba Bank for the years from 2018 to 2023 and information in the public domain from reliable thirdparty sources. These methods are summarized as follows: 1. Discounted Cash Flow Model (DCF) 2. Market Comparison - Price / Book Value Multiple (P/B) 3. Market comparison-: Price / Earnings Per Share (P/E) 4. Dividends Discount Model (DDM) The Use of Proceeds The capital increase proceeds will be used for the following objectives: Entering into long term strategic investments. Reinforcing the single obligor maximum amount; providing more opportunities to grow the size of our current financing portfolio, capture new customers category resulting in more business and cross-selling opportunities. Increasing the allowed maximum investment limits, which will further enhance the size of our investment portfolio, given that certain investment categories require minimum investment amounts. This covers the areas of direct and financial investment both on the level of each investment and the overall size of the investment portfolio. Investing in long-term capital expenditure to support the Bank s growth. Warba Bank (K.S.C.P.) Shareholders Public Subscription Prospectus in the Share Capital Increase Page 21 of 52

22 Information about the Issuer 1. Overview Name of the Issuer Legal Structure of the Issuer Address of the Bank s Headquarter Postal Address Incorporation Date & Domicile Issued and Paid up Capital Legislation Under which the Bank is Incorporated Legislation Under which the Bank Conducts Business Warba Bank K.S.C.P Kuwaiti Shareholding Company, Public Sharq Sanabil Tower Floor 26, 27 & 28 - Kuwait City P.O Box 1220 Safat Kuwait 17 February 2010 Kuwait KWD 100,000,000 (Kuwaiti Dinars One Hundred Million) Warba Bank was established by the Kuwait Investment Authority (KIA) being the government entity entrusted with the incorporation of the Bank under Article 1/A of Law No. 1 /2008 concerning the incorporation of a shareholding company undertaking banking business in compliance with Islamic Sharia and the Council of Minsters Resolution No.716/First in Meeting No. 34-2/2008 dated 7/7/2008; and in KIA capacity representing the State of Kuwait. The Bank was established on 17 th February 2010 by virtue of the Amiri Decree No. 289/2009 dated 15/9/2009 licensing the incorporation of a Kuwaiti shareholding company in the name of Warba Bank K.S.C.P as per the provisions of Companies law No. 25/2012 as superseded by Law No. 1/2016 as amended and its executive regulations as well as Law No. 32 of 1968 concerning Currency, the Central Bank of Kuwait and the Regulation of the Banking Business as amended and Law No. 30/2003 adding a special section for Islamic Banks To Chapter (3) of Law No. 32/1968. The Bank was officially enrolled in the Central Bank of Kuwait s Register of Islamic Banks on April 7th, Currently the Bank operates under: Law No. 1/2016, as amended, its Executive Regulations; Law No. 32 / 1968 concerning Currency, the Central Bank of Kuwait and the Regulation of the Banking Business as amended; Law No. 30/2003 adding a special section for Islamic Banks to Chapter 3 of Law No. 32/1968 concerning Currency, the Central Bank of Kuwait and the Regulation of the Banking Business as amended; and Law No. 7/2010 Concerning the Incorporation of Capital Markets Authority and the Regulation of Securities Activities and its Executive bylaw as amended. Warba Bank (K.S.C.P.) Shareholders Public Subscription Prospectus in the Share Capital Increase Page 22 of 52

23 2. Description of the Issuer s main activities and any further exceptional factors of substantial effect on these activities RETAIL BANKING GROUP RBG The Retail Banking Group enjoyed a year of significant growth throughout In addition to this balance sheet growth the group has added a large number of new services to the online and mobile channels which have been well received in the market. This growth, witnessed in all areas has resulted in strong revenue growth for the group. The banks distribution network has now grown to 12 branches with more expansion planned in the year ahead. In addition rationalization has seen our costs reduced and one branch, Hawally, relocated to a more attractive location. With the Municipality, lifting the restriction of only 3 banks being allowed in any residential area the challenge of branch expansion should be eased to some degree as we move forward. In addition, the deployment of our Express Banking solution will make many traditional branch transactions available to our customers 24 hours a day. This solution is a combination of self-service for deposits and withdrawals and assisted transactions such as account opening, card issuance, finance application etc. The customer is assisted through a video link to our Call Centre where agents are available 24/7. The bank now has 35 ATMs in both branch and off-site locations. The off-site ATM work has expanded with a focus on heavy footfall locations. This network, in spite of the low ATM fee structure in Kuwait, now produces a positive revenue stream for the group. Towards the end of 2017 we have replaced our ATMs with the latest ATMs from Diebold Nixdorf on a five year lease deal. This has not only lowered our costs but also provides us with the latest ATM security technology. Retail assets have again grown strongly during 2017 with all channels achieving impressive results. The branch network although small compensates for this through aggressive calling programs in their local communities. The Direct Sales team has grown during the year and is achieving some of the highest sales productivity rates in the market. In addition to this our innovative approach to auto finance supported by our physical presence in 18 dealerships has allowed us to attain a leading position in the auto financing market. Deposit gathering has been another area of focus and again we have seen strong progress. Our deposit base has grown by over 150% (one hundred & Fifty percent) year on year with individual customer deposits taking the major share of this growth. The Sunbula Savings account launched in 2016 has continued to thrive and attract new customers to the bank. To compliment this, a new fixed deposit product Sunbula FD was launched in September This product has also been well accepted in the market attracting a significant amount of new funds to the bank. Our Card business has continued to grow ad during the year we have introduced both Visa Signature and MasterCard World credit cards for our affluent segments. Both cards offer a wide array of benefits for our customers. In addition we have enhanced the security for our customers when shopping on line through the introduction of 3D secure. In addition we have successfully launched a new premier debit card and cash deposit card for non-individual clients. Continuing our strategy of offering services anywhere and at any time we have upgraded the functionality of both our online and mobile banking applications. Now clients can perform a wide array of transactions without visiting the branch. Whilst this has enhanced our service levels it has also reduced costs and increasingly allowed the branch network to focus on sales and service. The group makes strong use of social media not only to advertise products and services but also to receive customer feedback. Our service quality levels are continuously monitored by independent third parties and we have continued to provide some the highest service levels in the market. The introduction of regular product knowledge Warba Bank (K.S.C.P.) Shareholders Public Subscription Prospectus in the Share Capital Increase Page 23 of 52

24 tests for staff across the group has assisted us in providing consistent service across the channels as well as identifying training needs. CORPORATE BANKING GROUP ( CBG ) CBG is responsible for providing credit services to Warba Bank corporate and high net-worth individual customers. Our implemented 5 years strategy is designed to secure strengthening our relations with existing customers and acquiring new profitable credit relationships. Throughout 2017, CBG succeeded in achieving significant growth in credit portfolio through targeting vital diversified sectors in the domestic market, achieving a targeted balance between the granted cash and non-cash facilities while maintaining low risk levels. This has positively affected the yearend results. WB- CBG managed during a short period since Inception to have a niche market position among other banks in the market place, to act as strong competitor and to participate in number of syndications with leading local banks. CBG is presenting to customers dynamic financing products and services through a dedicated team of national calibers and product specialists working together to meet all financial services and product requirements. This team aims to serve customers on a 360 degree basis. In a sense to put the customer in the focal point of our care, surrounded by our comprehensive range of corporate lending products, in addition to cross sell other investment & retail banking products & services. CBG is aiming to empower our corporate customers to grow and expand their businesses, our responsibility goes beyond just starting a relationship with our customers, However, it is extended to represent our commitment and our promise to support their growth ambitions, providing ideas, tools to help them become stronger, today and in the future. Accordingly, this will deepen the relation and shall secure the sustainability of the growth of our financing portfolio. As for service development during 2017, CBG, introduced a number of new services and products to expand the CBG products mix including the working capital finance to cater for the short term financing needs, residential financing facility, and outlet financing solutions. Also, CBG developed and enhanced the online banking trade finance to provide more ease and lesser time in processing customers request. Also, as an internal service development, the 360 model has been implemented to enhance and facilitate the management of workflow. INVESTMENT BANKING GROUP The Group invests globally across multiple asset classes and a diversified set of sectors. The Bank s investment banking activities were geared to enhance the quality of its assets whilst maintaining a healthy risk adjusted return from its investment portfolio and through its services increase the arena of earning fees & commission for the Bank. In 2017, the Investment Banking Group (IBG) witnessed outstanding growth and achievements through its various business activities in structured finance, syndications, fixed income securities, and international real estate despite the persistent political and economic volatility witnessed in the region. These achievements highlight the Group s capabilities and capacity to grow under challenging market conditions and exhibit the Group s diverse business offering. The Group s Debt Capital Markets origination activities focused on the debt capital-raising needs of its institutional clients, from inaugural Sukuk issuances and exchanges to cross-border transactions and groundbreaking landmark structures. On account of its aspiration for providing innovative financial solutions, the Group endeavors to make Warba Bank the bank of choice for local and regional issuers and clients underwriting needs. The Group s structuring and execution expertise has established Warba Bank as a major player in the Debt capital markets and has distinguished the Bank as a distinguishable choice for Islamic debt underwriting, with excellence across several geographic jurisdictions and currencies. Warba Bank (K.S.C.P.) Shareholders Public Subscription Prospectus in the Share Capital Increase Page 24 of 52

25 In 2017, the IBG team played a key role in arranging Warba Bank s debut USD 250 million Tier 1 Basel III compliant Sukuk issuance. The issuance enhanced the Bank s capital base in line with Basel III guidelines. The Sukuk attracted strong investor interest reaching USD 1.3 billion from diverse domestic and international accounts, representing a well spread distribution of investors from the Middle East, Asia and Europe. The Sukuk issuance was hugely successful, being oversubscribed more than 5.3 times over. In 2017, the Group made a concerted effort to lead transactions regionally and globally and was successful in securing multiple mandated Issue Manager and book runner roles, most notable amongst them included: USD 236 million duel currency syndicated facility for Ziraat Participation Bank, Turkey; where Warba Bank held the titles of Mandated Issue Manager & Book runner. Structured syndicated facility of USD 65 million secured by credit card receivables for Defacto Perakende Ticaret, Turkey. Warba Bank took the role of Investment Agent in the Transaction in the dual currency transaction which was oversubscribed by 1.5 times by a mix of Middle Eastern and Turkish banks and financial institutions. Warba Bank participated in a syndicated financing facility for NMC Health Care L.L.C. The total facility including its conventional tranche closed at USD million after being oversubscribed by 1.65 times with interests from 3 regional and 19 international participants. USD 300 Million Murabaha transaction for the funding of ALAFCO where Warba Bank secured the role of Mandated Issue Manager and Investment Agent. ALAFCO is a leading aircraft-leasing specialist company, based in Kuwait and listed on the Kuwait Stock Exchange. Meraas inaugural USD 400-million Sukuk Issuance where Warba Bank held title of the Joint Lead Manager bookrunner. IDB s USD 1.25 Billion issuance was listed on the London Stock Exchange (LSE), Nasdaq Dubai and Boursa Malaysia. Warba Bank acted as a Joint Lead Manager and Bookrunner on the issue. USD 500 million debut Sukuk issuance for Mazoon Electricity, Oman which had a robust investor demand that translated into a final order book of USD 5 Billion from 300 orders, representing more than 10 times oversubscription. The Sukuk is listed on the Irish Stock Exchange. Warba Bank secured a role of Co-Lead Manager on the issue. Warba Bank participated in the Emirates REIT debut Sukuk issuance as Joint Lead Manager and Bookrunner in December The USD 400 million inaugural Sukuk was 2.5 times oversubscribed with its order book peaking at USD 1.1 Billion. The transaction marks the first REIT from the MENA region to access the international Sukuk market and obtain a credit rating. The Sukuk represents the tightest credit spread of any debut issue among Dubai real estate entities carrying similar rating. Warba Bank was appointed Dealer on the ICD Sukuk Certificate Issuance Program in November, 2017, along with other regional and international banks. Warba Bank (K.S.C.P.) Shareholders Public Subscription Prospectus in the Share Capital Increase Page 25 of 52

26 Other Notable Transactions: Warba Bank jointly with Boubyan Bank arranged a club facility of USD 145 million for Etihad Airways comprising of senior unsecured Islamic Commodity Murabaha Tranche with a door to door tenor of 5 years. Etihad Airways is Abu Dhabi s flag carrier and the second-largest airline in the UAE. Warba Bank jointly with KFH, Citi, NBAD, Banca IMI arranged a dual tranche facility of USD 600 for United Telecommunication Co. LTD. comprising of senior secured syndicated Islamic Murabaha Financing with a tenor of 5 years. Warba Bank participated in a 7-year Junior Facility syndicated facility by Norddeutsche Landesbank, Credit Agricole Corporate and Investment Banks and BNP Paribas for refinancing of Cargolux s maturing liabilities on 2 of its Cargo Aircrafts. The facility marks the first ever Islamic facility undertaken by the government of Luxembourg or any of its Government related entities GRE and is expected to pave the way for potential growth of Islamic finance in Luxembourg. Established in 1970, Cargolux is a leading global all cargo airline, operating a fleet of 26 modern Boeing and freighters and covers a world-wide network of over 90 destinations. Warba Bank was a Mandated Issue Manager in a syndicated facility by Abu Dhabi Islamic Bank mandated by Dubai Aerospace Enterprise DAE for the acquisition of 2 new aircraft to be leased to Egypt Air for 12 Years. The total facility amount was USD 75.6 million. Established in 2006, DAE is one of the world s largest aircraft lessors with a total active and committed fleet of 392 worth over USD 5 BN. Warba Bank has acquired from AMIFC (Al Mulla International Finance Company) consumer finance receivables worth KWD 31 million in the latest round of securitization deals. AMIFIC is one of the leading Sharia compliant consumer finance companies in Kuwait. Real Estate Investments Warba Bank acquired a Class -A single tenant office building leased out to Arrow Electronics on a 15 year lease. The built-to-suit building is located in Denver, Colorado and is opposite the Global headquarters for Arrow Electronics, rated investment grade BBB- by S&P. In 2017 Warba Bank invested in a newly constructed sole UK vehicle import/export facility with a capacity of over 15,550 cars parking and totaling acres of land (35.08 hectares) including a total of 63,515 sqf (5,901 sqm) warehouse space leased KIA Motors UK Ltd unbreakable for 20 years on NNN lease terms generating an initial annual rent of GBP 1,420,000. KIA Motors UK Limited has a Dun and Bradstreet rating of 5A1 representing minimum risks of Business failure. Warba Bank successfully closed a real estate property called Manpower Group Headquarter Building a Class-A single-tenant NNN leased office building located in Milwaukee, Wisconsin, USA. The property is leased through August 2031 to Manpower Group, Inc. Warba Bank acquired a Class -A multifamily property called Ultris at Banyan Grove ( Ultris ) located at highly desirable location in Virginia Beach, Virginia. The property was acquired on 1st August 2017 under a joint venture arrangement with Croatan Investments ( Croatan ), a local developer and multi-family operator that has a strategic alliance with an experienced local management company, The Franklin Johnson Group ( TFJG ). Warba Bank acquired a Class A-Luxury multifamily apartment s complex called Suite 2801 located at highly desirable location in Euless, which is a 25-minute drive from the heart of the Dallas. The property was purchased on 31st July 2017 jointly with Cortland Partners. Warba Bank (K.S.C.P.) Shareholders Public Subscription Prospectus in the Share Capital Increase Page 26 of 52

27 TREASURY Despite a challenging external environment that resulted from the G-10 Central Banks shift in monetary policy, the rise in the Central Bank of Kuwait s Discount Rate and the U.S. Fed Funds Rate, choppy Brexit negotiations, and global geo-political developments, 2017 was an exciting year for the bank s Treasury. It played an instrumental role in the bank s successful debut in the Sukuk market with the issuance of USD250.0 mil. Perpetual AT1 Sukuk on 14 th March Foreign Exchange volume was at a record allowing the bank to register its highest ever FX profits while deposits increased by more than 40%. Active management of the funding portfolio ensured that the bank s cost of funds remained significantly below budgeted levels and the total volume of deals transacted through Treasury grew by almost three times that of The heart of Treasury s activities was the management of the Bank s liquidity and market risk to ensure the Bank operated optimally and within the mandated regulatory limits. The latter half of 2017 saw the department embarking on ensuring the bank s compliance with the CBK s Net Stable Funding Ratio which comes into effect on 1 January In line with the bank s Strategy Treasury did extensive work to gear up its capabilities through the introduction of new products that were either deployed or at the advance stage of development. This included the bank s Wa ad based FX Forward product to enable the bank s customers to hedge their future known FX commitments and negate the effects of market volatility on their cash flow and income, Profit Rate Swaps to hedge market risk and Collateralized Murabaha to enhance liquidity. These new products are aimed at supporting the bank s ability to offer her customer s cutting edge solutions in support of their business needs. During the year Treasury also undertook successful counterparty visits to Bahrain, Qatar and the U.A.E. where we met our fellow Treasury colleagues, strengthened relationships and explored further business opportunities. Warba Bank s Treasury strives to maintain the highest standard of professionalism and service and is staffed by a professional team of dealers who are constantly engaged in the global market. It is well positioned to capitalise on all opportunities in 2018 and looks forward to an even more exciting year. Following factors have substantial effect on above activities Banks major activity is financing to individual and corporate customer. Increase in nonperforming assets NPA may lead to deterioration in overall credit profile and impact the ability to finance more to existing and new customers. The Bank s credit risk exposure with respect to financing receivables is concentrated in the construction and real estate sector, any negative news or slowdown in this sector may significantly impact the business volume and credit profile. Bank insists on getting collateral before financing any customer. Any fall in collateral value may lead to lower collateral coverage and increase in NPA The Bank is subject to the risk that liquidity may not always be readily available or may only be available at costs which may adversely affect its business. Liquidity risk involves the inability of the Bank to fund increase in assets, manage unplanned changes in funding sources and to meet obligations when required. The cost of such liquidity risk would be in terms of either raising fresh liabilities at higher cost or liquidating its assets at a higher discount rate. The Bank faces market risk, which is primarily on account of Foreign Exchange exposures, any adverse movement in forex and high open position may negatively impact the business and profitability The Bank is susceptible to profit rate risk as the value of the Bank s fixed income financing and investments are inversely related to rising rates. The Bank s financing to retail customers is done Warba Bank (K.S.C.P.) Shareholders Public Subscription Prospectus in the Share Capital Increase Page 27 of 52

28 on fixed rate basis and can extend up to 15 years in tenor. As a result the Bank is exposed to the risk of adverse movement in the profit rates impacting the profitability of the Bank. Bank operates as per General Guidelines for Internal Control Systems and directives regarding Sound Practices for the Management and Control of Operational Risks. Any breach in processes and internal & external fraud may adversely impact banks performance and reputation. The Bank s activity could be impacted by Legal risk which arises from the lack of documents, or failure to obtain the necessary authorizations from customers who are involved in trading with the bank, or failure to sign contracts, or violation by the bank of legal rules. The Bank faces high levels of competition for all of its products and services in Kuwait. In particular, the Bank competes with other domestic Islamic banks and such competition may increase. The Bank s credit rating is supported by Kuwait s country rating. Sustained low oil prices may lead to downgrade in country rating and in turn, impact Bank s rating. Lower credit rating may result in higher cost of find for the bank Bank has invested in real estate properties in US, UK and other GCC countries. Any adverse movement in real estate prices or decrease in rental yields will impact business and profitability. 3. Statement of specific clients or suppliers and patents, intellectual property rights, licenses or special contracts which have a major significance in the Issuer s activity Nothing in particular 4. Information about the Issuer s current investments, if any, and their relevant risks Key Special Purpose vehicles Wholly owned by Warba Bank Name of company Principal activities Country of incorporation Effective shareholding % as on 31 December 2017 Abyat Real Estate Company L.L.C. Real Estate Sultanate of Oman 100% Thamer Al Omania Company L.L.C. Real Estate Sultanate of Oman 100% Al Kout Holdings Limited Real Estate United Kingdom 100% Warba Tier 1 Sukuk Limited Financial Securities Cayman Islands 100% Other Investments Type of Investment Sector Geography Investment Properties Real Estate Kuwait, Sultanate of Oman, UK Joint Ventures Real Estate USA Equity Securities Real Estate, Financial Institutions Emirates, Kuwait Funds & Portfolios Sukuk Real Estate, Aircraft leasing, Equipment Leasing Banks, Energy, Financial institutions, Government, Real estate, Petroleum & Other services KSA, USA, Cayman Islands Emirates, Bahrain, Qatar, KSA, Kuwait, Turkey, Oman, Indonesia, Malaysia Warba Bank (K.S.C.P.) Shareholders Public Subscription Prospectus in the Share Capital Increase Page 28 of 52

29 Associated Risk The Bank could be adversely affected by market risks that are beyond its control, including, without limitation, volatility in prices of securities, currency exchange rates and profit rates. The Bank is susceptible to profit rate risk as the value of the Bank s fixed income investments and/or return on financing are inversely related to rising profit rates, particularly where the Bank s liabilities are short in tenor and are subject to market rate conditions. The Bank is subject to the risk that liquidity may not always be readily available or may only be available at costs which may adversely affect its business. Liquidity risk involves the inability of the Bank to fund increase in assets, manage unplanned changes in funding sources and to meet obligations when required. The cost of such liquidity risk would be in terms of either raising fresh liabilities at higher cost or liquidating its assets at a higher discount rate. The Bank maintains a portfolio of equity securities. Any changes in the fair value of these securities, for example as a result of changing equity prices have an impact on the Bank s equity and profitability. Real estate prices are cyclical in nature, however global Real estate prices have not seen any correction in last 5-7 years and seems to be prima facie over-valued with (a) the liquidity created by the global Central Bankers easy monetary policies; and (b) the artificially suppressed interest rates. These factors have led to creation of unprecedented bubbles in all the speculative asset classes. These could implode in the fullness of time. The resultant reversal of the asset valuations to their respective long-term means potentially exposes to a high degree of market risk. 5. Information about claims, judicial actions or arbitration procedures, whether considered, suspended or alleged to be taken against the Issuer or any of its Subsidiaries, which may have substantial effect on its financial position. Nothing in particular 6. Basic information about all the main contracts of the Issuer or the Issuer s Subsidiaries within the two years preceding the date of applying for approval on the Prospectus and the parties of these contracts, provided that routine contracts entered into within the ordinary course of the Issuer s business are not included. Nothing in particular 7. Number and details of any Securities previously issued by the Issuer WARBA BANK TIER I SUKUK A mainstay of Warba Bank s 2021 strategy is a strong capital base and enhancing the Bank s capital base has been conceived to be critical to the Bank to sustain its growth trajectory and to capture market share. For those reasons, Warba Bank s management and Board of Directors decided to tap the international debt capital market and issue the bank s inaugural Tier I Sukuk. On March 14th 2017, Warba Bank reinforced its capital base by issuing its debut USD 250 million Tier 1 Sukuk pursuant to a Mudaraba structure and in keeping with Basel III guidelines. The issuance was hugely successful, reaching USD 1.3 billion in subscriptions, being oversubscribed more than 5.3 times over, and increased the bank s capital adequacy ratio (CAR) to 26.31%. The Sukuk issuance was the only one of its kind in 2017 whereby it stood as the only Sukuk issued by a Kuwaiti bank. The deal was indeed a vote of confidence for Warba Bank in particular and the Kuwaiti banking sector in general. Warba Bank (K.S.C.P.) Shareholders Public Subscription Prospectus in the Share Capital Increase Page 29 of 52

30 Issuer Warba Tier 1 Sukuk Limited (Exempted) Obligor Warba Bank K.S.C.P. Currency / Format USD / Fixed Rate Status Subordinated Tier 1 Capital Certificates Obligor Rating Baa2 (Moody s) / A+ (Fitch) Issue Rating Unrated Amount USD 250 million Pricing Date 7 March 2017 Issuer Call Date 14 March 2022 (first call date) or any date fixed for profit payment as per payment terms Coupon 6.500% per annum till the first call date thereafter the expected profit rate will be fixed again based on the profit rate then prevailing for the US Mid Swap Rate plus initial margin of % per annum. Listing Irish Stock Exchange, NASDAQ Dubai Governing Law English Law 8. Brief description of the Group of which the Issuer is a member, if any, and the place occupied accordingly in such Group. Not Applicable 9. Statement of the shareholders having 5% or more of the issuer s share capital The following schedule demonstrates key shareholding structure as on 30/09/2018. NAME DISCLOSURE TYPE PERCENT (%) Kuwait Investment Authority Direct & Indirect Al Sayer Group Holding Co. Indirect The Public Institution for Social Security Indirect Statement of the Issuer s dividends No dividends distributed in the last five years. 11. Brief description of the transactions carried out or to be carried out by any Related Parties. Related party transactions reported in the Bank s consolidated balance sheet as of 31 December 2017 are as follows: Major Shareholders Board of Directors and Executive Management All Amounts in KWD 000 Other Related Parties Total Financing Facilities - 1, ,088 Credit Cards Depositors Accounts 676, ,075 Warba Bank (K.S.C.P.) Shareholders Public Subscription Prospectus in the Share Capital Increase Page 30 of 52

31 Related party transactions reported in the Bank s consolidated income statement as of 31 December 2017 are as follows: Major Shareholders Board of Directors and Executive Management Other Related Parties All Amounts in KWD 000 Total Deposits revenues and financing income Credit Cards and profit 9, ,821 distributions to depositors 12. Board of Directors Information: A. Names and positions of the members of the Issuer s Board of Directors or of the Board of the entity managing the Issuer S. Name Position 1. Mr. Abdulwahab Abdullah Al Houti Chairman 2. Mr. Sami Fahad Al Rushaid Vice Chairman 3. Mr. Ahmad Abdulaziz Al Ghannam Board Member 4. Mr. Abdulaziz Abdullah Al Jaber Board Member 5. Mr. Eid Nasser Al Rashidi Board Member 6. Mr. Mohamed Riyad Al Mutawa Board Member 7. Mr. Mohamed Abdulredha Saleem Board Member 8. Mr. Musaab Omar Al Fulaij Board Member 9. Mr. Hani Abdulaziz Hussain Al Terkait Board Member 10. Mr. Hisham Abdulrazzak Al Razzuqi Board Member Warba Bank (K.S.C.P.) Shareholders Public Subscription Prospectus in the Share Capital Increase Page 31 of 52

32 B. Number and class of Shares owned by each Member of a Board of Directors of the Issuer in the Issuer s capital Name Number of Shares Class of Shares 1. Mr. Abdulwahab Abdullah Al Houti 1,368 Shares 2. Mr. Sami Fahad Al Rushaid 1,368 Shares 3. Mr. Ahmad Abdulaziz Al Ghannam 1,000 Shares 4. Mr. Abdulaziz Abdullah Al Jaber 2,736 Shares 5. Mr. Eid Nasser Al Rashidi 1,000 Shares 6. Mr. Mohamed Riyad Al Mutawa 1,000 Shares 7. Mr. Mohamed Abdulredha Saleem 100 Shares 8. Mr. Musaab Omar Al Fulaij 2,736 Shares 9. Mr. Hani Abdulaziz Hussain Al Terkait 684 Shares 10. Mr. Hisham Abdulrazzak Al Razzuqi 2,052 Shares Ordinary Shares C. Resume of each present member of a Board of Directors of the Issuer and the nature of any family relationships between them 1. Mr. Abdulwahab Abdullah Al Houti Chairman (Elected): Al Houti holds a Bachelor in Business Administration from Kuwait University in 1976 and Master of Business Administration from Newhaven University USA in He is a Board Member in Warba Bank since 2013 then elected to be the Board Chairman in March 2016 until date. He is also the advisor of the Chairman of the International Islamic Charity Organization from He commenced his career as a faculty member and head of Business Administration department at the Commercial Institute during the period from 1979 to 1983, and then assumed the position of Department Director and Assistant Undersecretary in the Ministry of Awqaf and Islamic Affairs from 1983 to Al Houti became the Deputy Secretary-General of Waqfi Channels at the General Secretariat of Awqaf from 1994 until He has been a board member in a number of companies and banks, namely Boubyan Bank, Bangladesh Islamic Bank, Capivest Bank and Real Estate Asset Management Company (REEM). 2. Mr. Sami Fahad Al Rushaid Vice Chairman (Elected): Al Rushaid holds a Bachelor of Science degree in Industrial Engineering from Miami University in the United States of America in He has been a member of Warba Bank s Board of Directors since March 2016 and elected as Vice Chairman since April 2018 to date. He is the Chairman of the Board of Directors of the Scientific Center and the Chairman of the Board of Directors of Kuwait Airways Company and appointed as a member of the Board of Directors in Kuwait Petroleum Corporation since January 2017 till date. He has long experience in the oil sector acquired throughout his career at Kuwait National Petroleum Company from 1978 to 2007 where he held several positions such as the Board Chairman and Managing Director in the last three years of his tenure. He then took over as a Board Chairman and Managing Director of Kuwait Oil Company from 2007 to He has been a Chairman or member of the board of directors in a number of companies operating in the oil sector such as Kuwait Oil Company, Kuwait Petroleum Corporation and Kuwait National Petroleum Company. Warba Bank (K.S.C.P.) Shareholders Public Subscription Prospectus in the Share Capital Increase Page 32 of 52

33 3. Mr. Ahmad Abdulaziz Al Ghannam Board Member (Elected): Al Ghannam holds a Bachelor of Science degree in Business Administration from Grand View University in the United States of America in He has been a member of Warba Bank s Board of Directors since March 2016 to date. He began his career in the Commercial Bank of Kuwait in the Trading Room & Credit Operations from 1987 to Then He moved to Al Ghannam Group of Companies holding several key positions from 1992 to date. He has been a Chairman and board member in many companies operating in educational and medical services, investment and trade sectors such as KAPICO Group Holding Company, Murabahat Investment Company, Gulf Land Holding Company, Sama Medical Services Company, Excellence Education Company for Educational Services, Dar Al Arqom Educational Services Company, Eyas Educational Holding Company and Al Oula Fuel Company, He is also a member of the Board of Directors of the Public Authority of Minors Affairs since March 2017 to date. 4. Mr. Abdulaziz Abdullah Al Jaber Board Member (Elected): Al Jaber holds a Bachelor of Science in Electrical Engineering from Washington University in the United States of America in He is a member of Warba Bank s Board of Directors since March 2016 to date. He began his career in Kuwait Oil Company from 1979 to 2004, where he held several positions until he became the Executive Assistant of the Managing Director for Administration Affairs. He then moved to Kuwait Petroleum Corporation in the position of the Executive Assistant for Privatization Affairs from 2004 to He began a new career in 2005 at Kuwait Finance House as Assistant General Manager of the Support Services Sector then General Manager of Human Resources and General Services Sector and then a consultant until He has been Chairman or member of the board of directors in a number of companies such as Petrochemical Industries Company, Gulf Oil Company and Human Investment Corporation. 5. Mr. Eid Nasser Al Rashidi Board Member (Elected): Mr. Eid holds a Bachelor Degree in Petroleum & Natural Gas Engineering from West Virginia University - USA in 2001 and Master of Business Administration from Maastricht University in 2010, He recently joined Warba Bank Board of Directors on 29th March In 2011 he cofounded FGA Partners LLC a special situations private equity firm, He is also the Board Chairman of Al Rayah United Insurance Brokerage Company and Board member of Al Masaleh Investment Company and a member of Kuwait Entrepreneurs Group, an advocacy group that promotes probusiness policies in Kuwait, he also works as a regional affiliate of Golden Gate Capital since He started his career in 2001 at Kuwait Investment Authority KIA where he served over 10 years, From 2003 to 2005 he was delegated to the KIA London Office to serve as an Investment Analyst, He represented KIA in the Board of Directors of Unitech Company in Bosnia and Al Ajial Investment Fund Holding in Morocco. 6. Mr. Mohamed Riyad Al Mutawa Board Member (Elected): Al Mutawa holds a Bachelor of Finance from Kuwait University in He is a member of Warba Bank s Board of Directors since March 2016 to date. He currently holds the position of Investment Manager at the Kuwait Investment Authority from 2001 to date. He has been a member of the board of directors in a number of companies such as Pakistan Kuwait Investment Company, Farah Al Magrib Real Estate Company and National Offset Company. He participated in several training courses, programs and seminars in various fields. Warba Bank (K.S.C.P.) Shareholders Public Subscription Prospectus in the Share Capital Increase Page 33 of 52

34 7. Mr. Mohamed Abdulredha Saleem Board Member (Elected): Saleem holds a Bachelor of Business Administration in Finance from the Kuwait University in He is a member of Warba Bank s Board of Directors since March 2016 to date. He has gained professional experience from his service over 30 years at Kuwait Investment Authority since 1986 where he held various positions including the Treasury Department Manager from 2006 to date. He has been Chairman or member of the board of directors in a number of companies such as Generations Fund Holding Company from 2010 till date, Kuwaiti Yemeni Real Estate Development Company, Kuwait Investment Company, the Egyptian Kuwaiti Real Estate Development Company, Gulf Custody Company, Kuwait Real Estate Holding Company, Kuwait Flour Mill & Bakeries Company and Travel & Conferences Company in Tunisia. He also participated in many theoretical and practical courses with leading banks and global financial institutions in areas of portfolios management, investment and capital markets. 8. Mr. Musaab Omar Al Fulaij Board Member (representing Kuwait Investment Authority): Al Fulaj holds a Bachelor of Science degree in Business Administration, Finance Major from Saint Louis University USA, He has been a member of the Board of Directors at Warba Bank representing Kuwait Investment Authority since September 2017 to date. He started his career in EQUATE Petrochemical Company from 1997 to Then he moved to Kuwait Investment Authority in 2001 till date currently serving as Senior Investment Manager. He participated as a member in the board of directors in several companies and committees such as the International Civil Company in France, the Advisory Committee of the Agricultural Portfolio at Kuwait Industrial Bank. He has been participating as a member in the Advisory Committee of the Industry Finance Portfolio in accordance with the provisions of Islamic Sharia since This in addition to participating in many courses, training programs and seminars in various fields. 9. Mr. Hani Abdulaziz Hussain Al Terkait Board Member (Elected): Al Terkait holds a Bachelor Degree in Chemical Engineering from Tulsa University in the United States of America in He has been a member of Warba Bank s Board of Directors from March 2016 to date. He has deep experience in the oil sector gained through his career of over 35 years in Kuwait Petroleum Corporation. He joined KPC in 1972 where he served in Kuwait National Petroleum Company, a KPC subsidiary, then moved in 1980 to Kuwait Petroleum Corporation until 2007 where he held several leading positions such as the Vice Chairman & CEO for the last three years of his tenure in KPC. He has appointed Oil Minister in the Kuwaiti Government by virtue of an Amiri Decree in February 2012 and continued holding this position until He has been a board member in a number of local and international companies such as Petrochemical Industries Company, Kuwait National Petroleum Company, and The Public Authority for Industry, Hoechst Company in Germany. He is currently a member of the board of the Supreme Council of Planning and a member of the Board of directors of Kuwait Foundation for the Advancement of Sciences. 10. Mr. Hisham Abdulrazzaq Al Razzuqi Board Member (Elected): Al Razzuqi holds a Bachelor Degree in Public Administration from the American University of Beirut in 1973, and Senior Management Program from Harvard University in He is a Board Member in Warba Bank since August 2013 to date. He commenced his career in Kuwait Foreign Trading & Contracting Investment Company from 1974 to 1984, assuming several positions, the last of which was the Deputy General Manager. He then joined Gulf Investment Corporation as Deputy CEO from 1984 to 1995, promoted to General Manager from 1995 to 2001, then to CEO from 2001 to He worked as a consultant to the International Business Conference Board, and a faculty member of Sulaiman Al Olayan School of Business Administration American University of Beirut. Warba Bank (K.S.C.P.) Shareholders Public Subscription Prospectus in the Share Capital Increase Page 34 of 52

35 He served as a board member or Chairman in more than 20 local and regional companies, banks and financial institutions, namely Bahrain Steel Company, International Gulf Bank of Bahrain, National Industrialization Company and Al Zamil Industrial Investment Company in KSA, Warba Bank, Kuwait Investment Company, Tawasul Telecom Company, Kuwait Reinsurance Company and Global Investment House. Note: There are no family relations among the Members of the Board of Directors. D. Statement of Committees occupied by Members of a Board of Directors of the Issuer. (1) Board Credit & Investment Committee (2) Board Audit Committee (3) Board Governance Committee (4) Board Risk Committee (5) Board Nomination & Remuneration Committee 1. Mr. Ahmad Al Ghannam Chairman 2. Mr. Abdulaziz Al Jaber Vice Chairman 3. Mr. Sami Al Rushaid Member 4. Mr. Hisham Al Razzuqi Member 1. Mr. Mohamed Saleem Chairman 2. Mr. Musaab Al Fulaij Vice Chairman 3. Mr. Mohamed Al Mutawa Member 1. Mr. Hani Hussain Chairman 2. Mr. Mohamed Saleem Vice Chairman 3. Mr. Abdulwahab Al Houti Member 4. Mr. Eid Al Rashidi Member 1. Mr. Hisham Al Razzuqi Chairman 2. Mr. Hani Hussain Vice Chairman 3. Mr. Ahmad Al Ghannam Member 4. Mr. Mohamed Al Mutawa Member 1. Mr. Sami Al Rushaid Chairman 2. Mr. Abdulaziz Al Jaber Vice Chairman 3. Mr. Musaab Al Fulaij Member E. The financial and in-kind benefits awarded to the members of the Issuer s Board of Directors or of the Board of the entity managing the Issuer during the financial year preceding the application for the approval of the Prospectus, and the estimated value of the benefits intended to be awarded to them in the financial year of subscription. The total amount allocated for the members of the Board of Directors for the year ended 31st December 2017 is KWD 166,000; the same amount is expected to be paid in Warba Bank (K.S.C.P.) Shareholders Public Subscription Prospectus in the Share Capital Increase Page 35 of 52

36 F. Members of the Executive Management. Name Title Years of Experienc e Nationalit y Education 1. Shaheen H. Alghanem Chief Executive Officer 30 Kuwait Master 2. Khaled H. Hafez Chief Financial Officer 25 Egypt Bachelor 3. Paul Quigley Chief Risk Officer 40 Ireland Doctorate 4. Mahmoud M. Yousef Chief Internal Auditor 38 Egypt Bachelor 5. Simon L. Clements Chief Retail Banking Officer 43 British Bachelor 6. Haytham A. Al Terkait Chief Information Technology Bachelor 30 Kuwait Officer 7. Mohamed Iqbal Treasurer 28 Malaysia Bachelor 8. Mohamed A. El Shareef Chief Strategic Planning Officer 19 Palestine Master 9. Zahid R. Abdul Rasheed Acting Chief Operations Officer 26 Pakistan Master 10. Thuwaini K. AlThuwaini Acting Chief Investment Banking Bachelor 13 Kuwait Officer 11. Mazen Mandani Acting Chief Corporate Banking Bachelor 19 Kuwait Officer 12. Abdullah Hamada Acting Chief Human Resources & Bachelor 13 Kuwait General Services Officer 13. Melhem A.M. AlMelhem Acting Legal Manager 26 Kuwait Bachelor Warba Bank (K.S.C.P.) Shareholders Public Subscription Prospectus in the Share Capital Increase Page 36 of 52

37 Risk Factors Credit Risks Credit risk is the risk of financial loss to the Bank if any counterparty to a financial obligation or instrument fails to or delays in meeting its contractual obligations, and arises principally from the Bank s receivables from Islamic financing activities, Ijara and investments, etc. For risk management control purposes, the Bank considers and consolidates all elements of credit risk exposure such as individual obligor default risk, country risk and sector risk in one measure about riskiness of an exposure, based on models and interplay of matrices. The Bank s Board has approved financing and investment policies for various business groups and investment asset types. RMG provides independent opinion and assessment of risk for every financing and investment that is proposed and presented to the approving authorities for decision making. In addition, the Bank endeavours to manage credit exposures by obtaining security where appropriate and limiting the tenor of exposure or structures that are beneficial to the overall risk profile of the Bank. Credit Risk Exposure. The credit policy of the Bank lays down guidelines for collateral valuation and management which includes, haircuts, minimum coverage requirement for different categories of collateral, revaluation, frequency and basis of revaluation, documentation, Takaful, custodial requirements etc. Lending Base Concentration Risk Although diversified by industry sector, the Bank s credit risk exposure with respect to financing receivables is concentrated in the construction and real estate sector, mainly in Kuwait. Construction and real estate sector contributes 34.4% of total credit risk exposure followed by Banking and Financial institutions at 17.4% at the end of Out of total credit risk exposure, MENA region contributes 91% while North America and Europe accounts for 3.3% and 4.1% respectively at the end of The Bank s 25 largest financing receivables outstanding as a percentage of its gross customer financing portfolio as at 31 December 2017 were 41.0 % compared to 36.6 % as at 31 December Deposit Base Concentration Risk The Bank largely depends on the customer deposits to meet most of its finance needs (deposits of individuals, corporate, government and non-bank financial institutions)., the Bank s 25 largest deposits as at 31 December 2017 constituted 82.3 % of its total customer deposits compared to 86.4 % of its total customer deposits as at 31 December The withdrawal or non-renewal of its deposits by any one or more of the Bank s large depositors could require the Bank to obtain replacement funding from other sources which may not be readily available or may be significantly more expensive, which would reduce the Bank s net profit margin and adversely impact its operating income and profitability. Market Risks Market risk may arise from open positions in profit rate, currency and equity products, all of which are exposed to general and specific market movements and changes in the level of volatility of market or prices such as profit rates, credit spreads, foreign exchange rates and equity prices. Banks market risk framework includes limits for all market risk parameters and regular limits monitoring to ensure that the Bank does not exceed aggregate risk and concentration parameters set by CBK limits and internal limits. Bank also performs Mark-to-market valuation based on independently published market data, and Warba Bank (K.S.C.P.) Shareholders Public Subscription Prospectus in the Share Capital Increase Page 37 of 52

38 continuous review of all open positions. The policies and procedures and market risk limits are periodically set and reviewed to ensure the implementation of the Bank s market risk appetite. Profit Rate Risk The Bank is susceptible to profit rate risk as the value of the Bank s fixed income investments and/or return on financing are inversely related to rising rates, particularly where the Bank s liabilities are short in tenor and are subject to market rate conditions. The major source of profit rate risk is inherent in Bank s financing to retail customers as this financing is completed on a fixed rate basis and can extend from 10 to 15 years in tenor. The Bank manages profit rate risk by placing limits on long tenor portions of the portfolio as a percentage of the total retail personal financing portfolio and with in-built hedge resulting from the lower profit rate risk as older financings mature. The Bank conducts stress testing and scenario analyses regularly to manage profit rate risk that is inherent in the Bank s balance sheet. Earnings-at-risk analysis is also conducted monthly, to determine the impact of changes in the cost of funds, and the yield on assets on profitability is monitored by the senior management of the Bank through the ALCO process. Liquidity Risks Liquidity Risk is the risk of the Bank being unable to meet its financial liabilities when they fall due. The Bank s liquidity strategy is to maintain a healthy level of liquid assets in the form of cash, cash equivalents and readily marketable securities. The Bank continuously monitors liquidity risk by measuring the maturity profile of its assets and liabilities on a daily basis and the liquidity gaps position is reviewed by ALCO on a monthly basis. Operational Risks Operational risk is defined as the risk of loss arising from inadequate or failed internal processes, systems failure, human error or from external events including losses resulting from failure to comply with Islamic Sharia regulations. When controls fail to perform, it can have legal or regulatory implications, or lead to financial or reputational loss. The Bank manages operational risks in line with CBK instructions regarding General Guidelines for Internal Control Systems and directives regarding Sound Practices for the Management and Control of Operational Risks. The Bank pays special attention to operational risks that may arise from noncompliance to Islamic Sharia principles and any possible failure in fiduciary responsibilities. The Bank has established its business continuity management policy to meet any internal or external failures and eventualities enabling smooth functioning of the Bank s operations. The Bank has established a disaster recovery site for its IT infrastructure, to ensure that operational risks do not adversely impact the Bank s business. Capital Adequacy The Bank actively manages its capital with the objective of maintaining adequate levels in order to cover all risks inherent in the business. The capital base is assessed to support the current and future growth of the business and the capital allocation is determined on the basis of financing and investments growth expectations for each business lines. The Bank is currently operating well above the minimum regulatory capital ratios, with ability to cover any eventuality and intervene at an early stage in situation of any stress. The business growth forecast is based on available capital, as allocated for different business lines to ensure that the Bank s internal capital targets are consistent with the approved Risk Appetite of the Bank to maximize shareholders value (on risk-adjusted basis). Warba Bank (K.S.C.P.) Shareholders Public Subscription Prospectus in the Share Capital Increase Page 38 of 52

39 As at 31 December 2017, the Bank s CET1 capital adequacy ratio (calculated according to Basel III standards) was % and its total capital adequacy ratio was %, in each case above the levels required by the CBK at that date of 9.5 % (CET1 capital) and 13.0 % (total capital). A variety of factors may affect the Bank s capital adequacy levels. For example, an increase in lending during 2016 and beyond is likely to reduce the Bank s capital adequacy ratios further and any losses experienced by it in future periods would have a similar effect. In addition, regulatory requirements in relation to the calculation of capital adequacy and required levels of capital adequacy may change from time to time including as a result of new guidelines issued by the Basel Committee on Banking Supervision. Foreign Exchange Risks Foreign exchange risk in the banking book arises from a currency mismatch between the Bank s assets and liabilities. The Bank is a Kuwaiti entity and the Kuwaiti dinar is its functional currency. Conventional methods, such as limiting net open positions, are used to manage any significant risk in other currencies. Assets carried at fair values that are not denominated in the Bank s functional currency are hedged using non-derivative Islamic financial liabilities for foreign currency risk, such as borrowing foreign currency to fund foreign currency assets. RMD monitors various foreign exchange limits on a daily basis and regularly reports on them to the ALCO. Credit ratings The Bank has a long-term issuer default rating of A+ with a stable outlook from Fitch and a long-term foreign and local currency bank deposits rating of Baa2 with a stable outlook from Moody s. These ratings, which are intended to measure the Bank s ability to meet its obligations as they mature, are an important factor in determining the Bank s cost of funding. According to Moody s and Fitch, a significant factor underpinning the Bank s ratings is their assessment that there is an extremely high probability of support for the Bank from the Kuwaiti authorities. A downgrade of the Bank s credit ratings, or a negative change in their outlook, may: - Limit the Bank s ability to raise funding; - Increase the Bank s cost of funding; and - Limit the Bank s ability to raise capital. Ownership Concentration Name and Shareholding Percentage - Kuwait Investment Authority (KIA) 24% Direct 1.263% Indirect - Al Sayer Group Holding Company % Indirect - The Public Institution for Social Security (PIFSS) 7.476% Indirect Kuwait Investment Authority KIA has a major shareholding interest in WB. While KIA has a controlling interest in a diversified range of financial services in the GCC region, there is no assurance that KIA will maintain the existing levels of its shareholding in the Bank nor that KIA will continue its support of the Bank through future injection of capital or deposits with the Bank where necessary. Any change in the controlling interest by KIA may have an adverse effect on the business, financial condition, and results of operations and prospects of the Bank. Related Party Exposures The Bank s principal related party transactions are with its major shareholders, directors and executive officers, their close family members and companies controlled by them or their close family members. IFRS requires the disclosure of shareholder related parties only in cases where those related parties Warba Bank (K.S.C.P.) Shareholders Public Subscription Prospectus in the Share Capital Increase Page 39 of 52

40 exercise significant influence. Certain related parties are customers of the Bank in the ordinary course of business. Transactions with related parties are made on substantially the same terms, including profit rates and collateral, as those prevailing at the same time for comparable transactions with unrelated parties. Such that the amount of risk with related party transaction may not be higher than the amount of risk taken in comparable transactions with unrelated parties. The Bank adheres to CBK guidelines on lending to related parties. financing facilities to members of the Board can only be approved under conditions specified by the CBK which include the following: - All facilities to Board members must be approved, renewed or modified only at the Board level - The approval, renewal or modification of Board members facilities can only be considered approved when at least three-quarters of the Board members have approved the same; and - The Bank must acquire adequate collateral. Further credit extensions to related parties are also subject to adherence to the overall CBK limits which include that the total correlated party exposures should not exceed 50 % of a Bank s capital. Expansion Associated Risks While historically the Bank s operations have been undertaken primarily in the Kuwaiti market and there is no immediate plan to expand outside Kuwait, the Bank has financing, Sukuk and Real Estate exposures outside Kuwait. If Bank decides to expand outside Kuwait, it may not be able to achieve any or all of these future strategic expansion objectives which could have a material adverse impact on the Bank s business, financial condition, results of operations or prospects Increasing Competition The Bank faces a high level of competition for all of its products and services. The Bank competes with other domestic banks in Kuwait. As the governments of the MENA region continue to liberalize their economies and initiate economic reforms, international banks are increasing their footprint in Kuwait, whether directly or through strategic investments, and compete with the Bank for financing and deposits as well as trade finance and other banking business. The competitive nature of the Kuwait banking market and that of the MENA region and any inability by the Bank to compete successfully may adversely impact the Bank s business, financial condition, results of operations or prospects. Loss of key Personnel The Bank s success and ability to maintain current business levels and sustain growth will depend, in part, on its ability to continue to recruit and retain qualified and experienced banking and management personnel. The market for such personnel in the Middle East is intensely competitive and the Bank could face challenges in recruiting and retaining such personnel to manage its businesses. The Bank depends on the efforts, skill, reputation and experience of its senior management, as well as synergies among their diverse fields of expertise and knowledge. The loss of key personnel could delay or prevent the Bank from implementing its strategies. The Bank is also not insured against losses that may be incurred in the event of the loss of any member of its key personnel. Impact of Regulatory Changes The Bank is subject to the laws, regulations, administrative actions and policies of Kuwait and each other jurisdiction in which it operates. These regulations may limit the Bank s activities and changes in supervision and regulation, in particular in Kuwait, could materially affect the Bank s business, financial condition, results of operations or prospects. Although the Bank works closely with its regulators and Warba Bank (K.S.C.P.) Shareholders Public Subscription Prospectus in the Share Capital Increase Page 40 of 52

41 continually monitors the situation, future changes in the regulation, fiscal or other policies cannot be predicted and are beyond the control of the Bank. Risks relating to the State of Kuwait & the MENA Region There has been significant volatility and disruption in the global capital and credit markets since the onset of the global financial crisis in late At times since then, there has also been a material reduction in the availability of finance, both for financial institutions and their customers. As a result, many financial institutions have been compelled to rely on central banks and governments to provide liquidity and, in some cases, additional capital. Governments around the world, including in Kuwait and other countries in the MENA region, have taken actions intended to stabilise financial markets and prevent the failure of financial institutions. Many countries in the MENA region experienced significant declines in real estate prices and in stock exchange indices and these factors adversely affected companies engaged in the real estate sector (including developers, construction companies and others) and investment companies. Reflecting a lack of diversification in Kuwait s economy, Kuwaiti banks had significant concentrations of these companies as borrowers and, as a result of the difficulties these companies experienced, Kuwaiti banks significantly increased their provisions in 2008 and 2009 as compared with prior years, which in turn adversely affected their results of operations. Warba Bank (K.S.C.P.) Shareholders Public Subscription Prospectus in the Share Capital Increase Page 41 of 52

42 Appendices Appendix (1): Approval of the Central Bank of Kuwait. Appendix (2): Approval of the Capital Markets Authority. Appendix (3): Opinion of the Sharia Supervisory Board Appendix (4): Subscription Application Form Appendix (5): Memorandum and Articles of Association Appendix (6): Financial Statements Warba Bank (K.S.C.P.) Shareholders Public Subscription Prospectus in the Share Capital Increase Page 42 of 52

43 Appendix (1): Approval of the Central Bank of Kuwait. Central Bank of Kuwait Dr. Mohamed Yusuf Al Hashel, The Governor Date 20/06/2018 Ref. 2/105/6023 To Mr. Abdulwehab A.A. Al-Houti, Chairman of the Board of Directors, Warba Bank Dear Sir, With reference to the Bank s letters dated 24/4/2018 and 30/5/2018 concerning the the request for the Central Bank of Kuwait s approval on increasing the Bank s share capital by 50% through issuing new shares for public subscription at share premium of 80 fils per share added to the share nominal value of 100 fils, we advise you of the Central Bank of Kuwait s approval on the said request. Best regards Dr. Mohamed Yusuf Al Hashel Warba Bank (K.S.C.P.) Shareholders Public Subscription Prospectus in the Share Capital Increase Page 43 of 52

44 Copy of the Central Bank of Kuwait Letter Dated 20/06/2018 Warba Bank (K.S.C.P.) Shareholders Public Subscription Prospectus in the Share Capital Increase Page 44 of 52

45 Appendix (2): Approval of the Capital Markets Authority Capital Markets Authority Date 29/08/2018 Ref. CMA To Mr. Abdulwehab A.A. Al-Houti, Chairman of the Board of Directors, Warba Bank (K.S.C.P.) Dear Sir, Subject: Approval on Warba Bank Share Capital Increase We refer to the abovementioned subject, your application dated 17/7/2018, your letter dated 16/8/2018 and in accordance with Capital Markets Authority (CMA) instructions concerning increasing, decreasing share capital or issuing securities, the provisions of Law No. 7/2010 and its Executive Bylaw as amended and the necessity of the Bank s compliance with Companies law No. 1 of We hereby advise you of Capital markets Authority s approval on increasing the Bank s share capital from KD 100,000,000 (Kuwaiti Dinars One Hundred Million only) to KD 150,000,000 (Kuwaiti Dinars One Hundred and Fifty Million only) by an increase of KD 50,000,000 (Kuwaiti Dinars Fifty Million) distributed to 500,000,000 (Five Hundred Million) shares at nominal value of 100 (One Hundred) Fils per share with issue premium. The share capital increase shall be allocated to the Bank s shareholders each pro rata his/her/its shareholding percentage. The Bank shall prepare private subscription prospectus as per the requirements of Chapter Five (Subscription in Securities) of the Eleventh Rule Book (Dealing In Securities) of the Executive Regulations of the Capital Markets Authority Law No. 7/2010 as amended. Best regards Ziad Yagoub Al-Foulaj Acting Head, Supervision Sector Warba Bank (K.S.C.P.) Shareholders Public Subscription Prospectus in the Share Capital Increase Page 45 of 52

46 Copy of the Capital Markets Authority Letter Dated 29/08/2018 Warba Bank (K.S.C.P.) Shareholders Public Subscription Prospectus in the Share Capital Increase Page 46 of 52

47 Appendix (3): Opinion of the Sharia Supervisory Board To Warba Bank Shareholders Peace and Blessing of Allah be upon You, Subject: Subscription in Warba Bank Share Capital Increase We advise you that Warba Bank s Sharia Supervisory Board has perused, in its Meeting No. 08/2018 dated 12/07/2018, the recommendation of the Board of Directors to increase the Bank authorized, issued and paid-up share capital by 50% (Fifty percent), from one billion shares to one billion and five hundred million shares at issue premium of 80 (Eighty) Fils per share, added to the nominal value of 100 (One Hundred) Fils, all in cash, by issuing new shares offered for public subscription allocated to existing shareholders enrolled in the Bank's Register as of the last trading day preceding the date of calling for capital increase; each shareholder according to his/her/its shareholding percentage in the Bank s share capital. The Bank s shareholders may subscribe for remaining shares not subscribed by eligible shareholders. If the subscription offers exceed the number of shares designated for subscription, these shares shall be allocated to subscribers according to their percentages in the subscription. In all cases where subscription for new shares does not cover all new shares, the unsubscribed shares shall be disposed off under law. The Board of Directors shall be authorized to call for capital increase and determine all controls, rules, terms and conditions of subscription and disposition of share fractions, if any. Sharia Supervisory Board has decided that there are no Sharia impediments in increasing the Bank s share capital. Sharia Supervisory Board has perused and approved the subscription prospectus in its Meeting No. 11/2018 dated 27/09/2018. Allah is the Best Guardian. Sheikh Dr, Issa Zaki Issa Chairman of Sharia Supervisory Board Sheikh Dr, Issam Khalaf Al Enezi Member of Sharia Supervisory Board Sheikh Dr, Mohammad Oud Al Fuzai Member of Sharia Supervisory Board Warba Bank (K.S.C.P.) Shareholders Public Subscription Prospectus in the Share Capital Increase Page 47 of 52

48 Copy of the Sharia Supervisory Board s Letter Warba Bank (K.S.C.P.) Shareholders Public Subscription Prospectus in the Share Capital Increase Page 48 of 52

49 Appendix (4): Subscription Application Form Issuer: Issue Advisor & Subscription Agent: Clearing & Depository Agent: Warba Bank K.S.C.P Kuwait Clearing Company Application for subscription in the Share Capital Increase Date: Application No.: To: Warba Bank. K.S.C.P. Dear Sir, Please accept my subscription application in the share capital increase approved by the Bank s Extraordinary General Meeting held on 00/00/2018 for shareholders recorded as on 25/11/2018 as per the following details: Shareholder s Details Subscriber ID No. Shareholder s Name Shares balance as on Details of Subscription Share Price: Balance of Subscribed Shares: Subscription Percentage: Total Amount Payment Method Bank s Name Payment Method: Transfer Transfer No. Applicant Telephone No. Transfer Date Signature Name of staff Signature Warba Bank (K.S.C.P.) Shareholders Public Subscription Prospectus in the Share Capital Increase Page 49 of 52

50 Sample of Subscription Application Form Warba Bank (K.S.C.P.) Shareholders Public Subscription Prospectus in the Share Capital Increase Page 50 of 52

51 Appendix (5): Memorandum and Articles of Association Contents Memorandum of Association (as amended) Articles of Association (as amended) Warba Bank (K.S.C.P.) Shareholders Public Subscription Prospectus in the Share Capital Increase Page 51 of 52

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102 Appendix (6): Financial Statements Contents Interim Condensed Consolidated Financial Information as at 30 September 2018 Consolidated Financial Statements as at 31 December 2017 Consolidated Financial Statements as at 31 December 2016 Consolidated Financial Statements as at 31 December 2015 Warba Bank (K.S.C.P.) Shareholders Public Subscription Prospectus in the Share Capital Increase

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