National Bank of Kuwait (NBK), the country's biggest lender by market value, has received the central bank's approval to raise its stake in Islamic lender Boubyan Bank to up to 60 percent.

Shares of NBK were down 1.6 percent, underperforming Boubyan's shares which were up 5.4 percent at 0825 GMT.

'The central bank of Kuwait has approved the request of (NBK) to acquire a maximum stake of 60 percent of Boubyan Bank's capital,' NBK said in a statement on the Kuwaiti bourse website on Sunday.

The approval is valid for three months starting March 22, it added.

NBK which is seeking to boost its sharia-compliant business, is the biggest shareholder in Boubyan, which has a market value of $2.65 billion, with a 40 percent stake.

Earlier this month, NBK's shareholders approved a 10 percent capital increase through a rights issue to fund expansion.

Boubyan Bank, which complies with Islam's ban on interest, competes with larger rival Kuwait Finance House and Kuwait International Bank. - Reuters