* KFH to hike capital by 20 pct - statement
* Price of new shares to be determined at later date
* Approval needed from current shareholders, regulator
KUWAIT, Nov 27 Kuwait Finance House
(KFH), the Gulf state's largest Islamic lender, will recommend a
20 percent capital hike to shareholders, the company said in a
bourse filing on Tuesday, which will help boost capital ratios
and fund expansion.
The company's board of directors decided on Monday to make
the recommendation when it holds its annual general meeting,
with proceeds to fund the bank's expansion both at home and
internationally, KFH said.
Any capital issue also requires approval from the country's
regulator. A potential capital increase will boost KFH's paid-up
capital to 348.5 million dinars ($1.24 billion) from 290.4
million dinars, Al Watan newspaper reported on Tuesday.
The price at which new shares will be sold during the
capital increase, which is part of the bank's five-year
strategic plan, will be determined at a later date, it added.
Shares in KFH were up 1.2 percent at 0.82 dinars at 0705
GMT, trimming year-to-date losses to 1.6 percent.
Kuwaiti banks have suffered since the global financial
crisis because of exposures to the local real estate and stock
markets whose values have dropped significantly, as well as to
investment firms which borrowed heavily in the boom years to
finance activity in the two areas.
In September, Fitch Ratings said it had downgraded KFH's
viability rating because of concerns over asset quality and loan
concentration at the lender, while its Tier 1 capital - a key
measure of a bank's reserves - lagged its Kuwaiti peers.
However, the agency said at the time a planned capital hike
to bolster reserves would be a positive step.
In November, Moody's placed all of KFH's ratings on review
for possible downgrade, with concerns over asset quality also
central to the move.
($1 = 0.2817 Kuwaiti dinars)
(Reporting by Sylvia Westall; Additional Reporting by Amena
Bakr; Editing by David French and Dinesh Nair)