Kuwait Finance House’s (KFH) shareholders
have approved the acquisition of Bahrain's Ahli United Bank (AUB), a step
closer to the completion of the region’s first cross-border merger in recent
years at a time when several other banks are consolidating.
Hamad Abdulmohsen Al-Marzouq, the Chairman
of KFH, said that the merged entity would have assets of $101 billion and
shareholder equity of $10.5 billion, with an annual forecast profit of $1.5
billion, based on past performance.
The shareholders agreed on the acquisition
of 100 per cent of the capital shares of AUB by way of share swap at an
exchange ratio of one KFH share for every 2.326 AUB shares.
“This acquisition represents a powerful
engine for growth and prosperity in the future of KFH, providing access to many
new markets in Britain, UAE, Oman, Iraq and Egypt and strengthening the
position of KFH in its current markets,” said Al-Marzouq.
The acquisaition of AUB will turn KFH into
a direct investment and banking destination, reducing group costs across its
markets, enhancing the efficiency of resources allocation and increasing
profitability, said Al-Marzouq.
In a bourse filing, KFH stated that its
shareholders also approved the listing of the bank on Bahrain Bourse and
authorised the Board of Directors to set the date of the listing.
Lower oil prices over the past five years
are forcing Gulf lenders to consolidate for scale and to better compete in a
crowded market. Subdued credit growth, competition for deposits, higher cost of
funds and deteriorating asset quality are driving consolidation in the regional
The merger between Alizz Islamic Bank and
Oman Arab Bank (OAB) is the latest deal nearing completion. Alizz Islamic Bank
and Oman International Development and Investment Company’s Board of Directors
approved a share swap ratio of around 81 per cent: 19 per cent for the
shareholders of OAB and Alizz Islamic Bank respectively.
Additionally, the National Bank of Bahrain,
which owns 29 per cent of Bahrain Islamic Bank (BisB), acquired a 78.8 per cent
stake in the Islamic bank, a month after the national bank offered to buy up to
100 per cent of the Shari’ah compliant lender’s paid-up ordinary shares.
In the UAE, Dubai Islamic Bank also
received shareholders’ approval for the acquisition of Noor Bank through a
capital increase and share swap to create a banking entity with assets of more
than AED 275 billion.
The deal is
expected to give the bank access to regional markets with a population of over
430 million people and a median annual per capita income of approximately
$42,000 on the basis of purchasing power parity.