Kuwait, London: Kuwait Finance House KSCP is in talks to buy Bahrain’s Ahli United Bank, a person familiar with the matter said, in a deal that would create one of the Middle East’s largest Islamic lenders with about $85 billion of assets.
KFH, as the lender is known, started discussions to acquire the Bahraini lender as well as its operations in Kuwait, the person said, asking not to be identified because the information is private. There is no guarantee that a deal will take place and final agreements haven’t been reached with any of the parties, the person said.
Lower oil prices are forcing Gulf lenders to consolidate for scale and to better compete in a crowded market. Abu Dhabi lenders National Bank of Abu Dhabi and First Gulf Bank recently merged to create a regional powerhouse with $175 billion of assets. Qatar’s Masraf Al Rayan is planning to combine with unlisted Barwa Bank and International Bank of Qatar in a three-way merger to create the country’s largest Islamic lender.
Ahli United in Bahrain declined to comment. A KFH official said he had nothing to add to comments made in a statement on May 21 that said the bank is studying a number of strategic alternatives to maximise its profitability and consolidate its position. It denied taking any decision in response to a Bloomberg report earlier this month that said KFH is in talks to buy Ahli United’s Kuwait operations.
Banking assets
KFH had $53.9 billion of assets at the end of March, while Ahli United had about $31.5 billion, according to data compiled by Bloomberg. KFH shares, listed on the Kuwait Stock Exchange, have lost 0.6 per cent so far this year, giving the lender a market value of $9.3 billion. Ahli United shares, which are cross-listed in Kuwait, have jumped 16 per cent so far this year, giving it a $5.57 billion market capitalisation.
AUB shares cross-listed in Kuwait advanced 0.5 per cent to 0.205 Kuwaiti dinar as of 11:58am local time, while KFH fell 0.4 per cent to 0.486 dinar.
