On 23rd March 1977, an Amiri decree was issued to establish Kuwait Finance House (KFH) as a Kuwaiti shareholding company, where the government holds 49%. These shares were divided as follows: The Ministry of Finance 20%, Ministry of Justice 20%, Ministry of Awqaf and Islamic Affairs 9%, while the remaining 51% were to be offered as initial public offering with a capital of KD 10 million (KD 1 per share). The establishment of KFH was a result of the visions of intellectuals who were seeking Shariah compliant banking alternatives.
The dream of establishing an Islamic bank has become a fact; however, the path to that dream was anything but easy, since many believed that the newly born institution would not survive for more than a few days. Three decades later, KFH became the biggest Islamic bank in the world and the most significant player in the Kuwaiti market, not to mention being a pioneer in offering Islamic banking services.
A group of Kuwaitis and Arabs worked together in 1968 by forming a preparation committee to establish an Islamic bank. This committee was formed of Abdullah Al-Mutawwa, Nezar Al-Seraj, Councilor Abdullah Al-Aqeel, Jamal Atiya, Hammam Al-Hashimi, Ismail Raafat, Moheb Al-Hajari, Mohey Atiya, and Dr. Eissa Abdo. The committee began setting the rules and regulations, and Dr. Eissa Abdo played a prominent role in the Islamic economy field.
The Minister of Finance at that time Abdul Rahman Al-Ateeqi called Dr. Eissa and told him that he is keen on executing the project. He also sent him an employee from the ministry to receive the files related to the studies conducted by the committee since 1968. The Minister of Awqaf and Islamic Affairs at that time Youssef Al-Haji assisted Al-Ateeqi in overcoming any obstructions that faced them. Later on, Al-Ateeqi discussed with the late Amir Sheikh Jaber A-Sabah the importance of this project, since it is the only solution for people who seek Islamic banking products and services, which prompted Sheikh Jaber Al-Sabah to sign the decree that was issued by the late Amir at that time Sheikh Sabah Al-Salem A-Sabah.
Many Kuwaitis were eager to acquire shares in the initial public offering, since KFH was the first and only local Islamic bank, and the first board was formed by Ahmed Al-Yasseen as the Chairman and Managing Director, Mohammed Bu Hendi as Deputy Chairman, Khaled Al-Ateeqi, Abdul Hameed Al-Obeid, Abdul Mohsen Al-Toweiresh, Ali Al-Fozan, the late Fahad Al-Dabbous who was replaced by Ali Al-Modaf, Mohammed Al-Roumi, Mereikhan Saqer, Hadi Al-Huweila, and Bader Al-Mukhaizeem was appointed as General Manager.
It took KFH 9 months since it was enlisted in the Trade Registry in December 1977 until the end of August 1978, where its management succeeded in such a short time to provide the bank with all means, tools and manpower required to start working.
On 28th of Ramadan, KFH opened its doors to its clients, where 170 accounts were opened during the first day. In 1983, KFH moved out from its temporary offices in Ahmed Al-Jaber Street to Al-Emad Commercial Center on the same street, until it finally settled in its current building in Abdullah Al-Mubarak Street in 1986.
KFH is known to be an Islamic institution made by its clients who are considered to be partners in the success. The past three decades were not easy, but they were definitely effective because of the accomplishments done, which turned KFH into an icon for Islamic banking, and made governments ask KFH to operate on their lands by offering it facilities and benefits, which reveals the value of its achievements that were a result of the sterling efforts of a group of men.
KFH offers more than 80 different advanced and shariah compliant services in all commercial, investment, financing, and banking fields. During the past years, KFH has leaped to be the first in the local market, and reinforced its presence in global markets, in addition to its social role and its participation in many major developmental plans in Kuwait and the world. KFH currently seeks to innovate more products and services to meet the growing demand of its clients.
Three points distinguished the period that proceeded after KFH’s establishment in the late 1980s, which are overseas investments and KFH global expansion, offering clients prime investment opportunities and innovating products that suit the investors and achieves good revenues. The overseas investment forms 40% of 2009 profits, especially after the businesses expanded and investments were made in the fields of real estate, financing, and participating in projects with major international banks.
Moreover, KFH prioritizes global expansion to cement its plans to become international, diversify investment opportunities, and offer new fields of business.
In 1988, KFH established an Islamic bank in Turkey called KFH-Turkey. It has also opened another bank in Bahrain, and obtained a license to work in Manheim in Germany, in addition to opening an office in Kazakhstan. KFH-Turkey is considered to be the biggest Islamic bank in Turkey and has 130 branches, and in 2007, it was awarded by the Turkish government as Best Banking Services Bank. KFH-Turkey serves as a link between Turkey and the GCC countries.
KFH-Bahrain works in all economic fields, and is rendered to be an added value to the economic business in Bahrain as a result of its banking, commercial, investment, and financing businesses. One of its famous projects in Durrat Al-Bahrain, which is a USD 3 billion real estate investment project, and Diyar Al-Muharraq that provides housing for 10% of the population in Bahrain, in addition to the industrial complex that attracts foreign investments and craftsmen. KFH-Bahrain has also established an Islamic bank in Jordan, and has investments in the United States and Europe.
The Malaysian government granted KFH a license to establish an Islamic bank in Malaysia, which comes as an appreciation of its pioneer role in Islamic banking. KFH-Malaysia is one of the most important banks in Malaysia, has 11 branches, and takes part in the biggest two real estate projects in south East Asia and China. The projects are called the Iskandar City and the Pensula project.
Al-Sharjah Islamic Bank was the first attempt to turn a traditional bank into an Islamic bank after operating for 26 years, where KFH led the bank to become Islamic in a matter of two years after changing all the accounting systems, the computer systems, and after training the employees. KFH acquires 20% of the bank with other partners with the Sharjah government.
KFH continued to play its leading role in the Equate Petrochemical industry that began in 1996, and participated for the third time in financing the new phase of the project that cost Islamic financers USD 300 million. This was the first time Islamic financing takes part in a major developmental project with traditional financing, which allowed other banks and Islamic banking institutions to work together.
KFH established real estate portfolios and funds in 1995 in the United States, which include Dana, health care, Al-Deera, and KFH Ijarah fund, where their capitals reached USD 750 million. Most of them were liquidated before the financial crisis that hit the markets. In Britain, KFH established a health care portfolio and Ethmar Industrial Real Estate Fund. In Sweden, KFH acquired the Swedish post office authority for EU 330 million. All these portfolios were also liquidated and achieved high profits. KFH also plays a major role in the issuance of the first shariah compliant Ijarah sukuk in a European country worth EU 100 million for Saxony Anahalt in Germany.
In the communications field, KFH played the role of the shariah councilor and main organizer in the largest Islamic financing deal in the world, where it offered USD 200 million to finance the second cell phone license in Saudi Arabia. It is worth noting that KFH was one of the main financial corporations that participated in financing the Thuraya project in Abo Dhabi.
KFH is the first bank to operate according to shariah in Kuwait, offer women their own branches, issue credit cards with chip technology, provided it clients with three banking services in one machine, issues prepaid cards for the family’s expenses, issues quarterly reports about the local real estate rates, offer more than 150 free services through its website kfh.com, issue Ijarah card that allows its holder to own commodities in Bahrain, offers cooperative marketing with the full support of the merchants, gathers all car agents in one place, launch a program for BlackBerry users, and offer electronic shariah compliant trading services.