Kuwait Investment Authority (KIA), the country's sovereign wealth fund, might sell its stake in Islamic lender Boubyan Bank in a public auction, a newspaper said.

Local daily Al-Watan said KIA aims to sell its 20 percent stake in Boubyan at 550 fils per share.

'I can't deny our inclination to sell our 20 percent stake in Boubyan. This is a big possibility,' the paper quoted a an unidentified source at KIA as saying.

'The auction option will be the best to avoid any possible confrontation with parliament,' the source added.

The KIA is expected to announce Boubyan sale by latest Monday, local Al-Rai said in an unsourced report.

KIA could not immediately be reached for comment.

National Bank of Kuwait (NBK) raised its stake in Boubyan Bank to over 12 percent becoming the third-largest shareholder in the Islamic lender to help boost its sharia-compliant business, bourse data showed on Thursday.

Boubyan has been in the middle of a row for the past weeks with both Commercial Bank of Kuwait and investment Dar disputing their right to own a 19.2 percent stake in the Islamic lender.

Dar, the Islamic finance firm that owns half of British luxury car maker Aston Martin, won a court ruling last week against CBK to suspend the sale of Boubyan shares after NBK said it reached a deal to buy the latter's stake in Boubyan.

Dar sold the stake to CBK in December with the right to buy it back, as it sought financing and to restructure its debt. But CBK has since said that Dar and its related firms have lost their right to buy back the stake.

The KIA is the largest shareholder in Boubyan, according to bourse data. - Reuters