Mega Islamic bank plans are cancelled

Mega Islamic bank plans are cancelled

By Arthur Macdonald , Available at: http://www.gulf-daily-news.com/NewsDetails.aspx?storyid=323879

MANAMA: Plans to create a mega Bahrain Islamic bank have been cancelled after the two banks involved have failed to reach an agreement.

Bahrain Islamic Bank (BisB) announced last year that it was in merger discussions with Al Salam Bank Bahrain. If the corporate marriage went ahead, the resultant financial institution would be one of the biggest Islamic banks in the country, according to BisB.

Based on publicly available information of the two banks, the merger would have created an institution that would have had total assets of BD1.7 billion ($4.5bn) and shareholders’ equity of BD337m.

But yesterday BisB and Al Salam Bank Bahrain announced they had mutually agreed to end merger talks after they were unable to reach an agreement on the exchange ratio for the shares.

In July, the board of directors of the two banks resolved to explore the merits of a combination involving the two entities. In this regard, the two banks appointed KPMG to assist in the evaluation exercise of the two banks.

KPMG completed its assignment and rendered their report to the two banks. In a joint Press statement, spokesmen from the two banks stated it is unfortunate that an agreement could not be reached on the share exchange ratio and hence the parties have decided to end the merger proposal.

Last year when the merger was suggested, the board of the two banks said that consolidation was the way forward for local banks in general and Islamic banks in particular in the aftermath of the financial crisis and economic downturn and greater competitive banking environment in the region.

BisB was the first Islamic bank established in Bahrain in 1979 engaged in retail and corporate banking.

Al Salam Bank Bahrain is an Islamic bank established in 2006 also engaged in retail and corporate banking.

No one was available for comment from either bank yesterday.

Regards
ZULKIFLI HASAN

Fujairah, United Arab Emirates

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