Dubai : In the latest example of consolidation amongst financial services firms in Bahrain, two lenders there on Thursday said they plan to merge and create what would be the Gulf state’s third-largest bank by assets.
BMI Bank, in which Oman’s Bank Muscat holds a 49 per cent stake, and BMI Bank,, an Islamic lender, said they agreed in principle on a merger.
“Consolidation was the only way forward for Bahraini Banks to stay competitive and financially strong in the aftermath of the recent financial crisis and resulting economic downturn,” said BMI’s Chairman Shaikh Khalid Bin Mustahail Al Mashani and Al Salam’s head Shaikha Hessa Bint Khalifa Bin Hamad Al Khalif in a joint statement.
“The new entity would become a strong player within the region and would significantly improve shareholder value through enhancement of revenue and rationalisation of costs,” the lenders said.
The merger, which involves a share swap, still requires regulatory and shareholder approval. The banks have set up a committee to finalise merger details.
Both banks have a network of around 10 branches each in Bahrain and the combined entity would hold assets of around 1.7 billion Bahraini dinars ($4.5 billion).
In the past year, several other Bahraini lenders have been consolidating, a move encouraged by financial authorities to absorb the impact of the global financial crisis, a regional real estate slump and political unrest on the Gulf island.
Earlier this year, National Bank of Bahrain and a local fund said they jointly bought a 51.6 per cent stake in Bahrain Islamic Bank. In another deal, three Bahrain-based Islamic banks — Elaf, Capital Management House and Capivest — finished their merger in January.
And Gulf Finance House said it is exploring the merger of Khaleeji Commercial Bank, in which it owns 47 per cent, with other lenders in the Gulf state.
