Photo: A Kuwait Finance House branch in Kota Kinabalu, Sabah, Malaysia, on Jun 24, 2017. Tang Yan Song/Shutterstock

Islamic Finance

Kuwait Finance House shareholders approve acquisition of Bahrain’s Ahli United Bank

The general assembly of shareholders of Kuwait Finance House on Monday (Jan 20) approved the acquisition of Bahrain’s Ahli United Bank.

KFH said in a bourse filing that the ordinary general assembly approved the bank’s Sharia Supervisory Board’s report on the acquisition of AUB and to convert it to become Shariah-compliant.

The Kuwaiti bank said the 100% acquisition of AUB’s capital shares will be by way of a share swap at an exchange ratio of 2.325581 shares of the Bahraini bank in exchange for one KFH share.

The merged bank will have assets of $101 billion and an annual profit forecast of $1.5 billion based on past performance, according to KFH.

For the most recent reported full-year results, KFH posted net profit of 227.4 Kuwaiti dinars ($749.12 million) in 2018, up 23.5%. AUB’s profit jumped 12.7% to $697.5 million in 2018.

KFH was in merger talks with AUB since mid-2018 and this cross-border merger follows a series of M&As in the Gulf’s banking sector.

Bahrain’s biggest lender National Bank of Bahrain announced on Sunday the acquisition of an additional 49.76% of Bahrain Islamic Bank to take its stake to 78.81%. NBB said the two banks will continue to operate independently.

In the UAE, National Bank of Abu Dhabi and First Gulf Bank merged in 2017 to form First Abu Dhabi Bank. This was followed by the merger of Abu Dhabi Commercial Bank, Union National Bank and the Shariah-compliant Al Hilal Bank in May to form the new ADCB Group. In December, Dubai Islamic Bank shareholders agreed to acquire fellow Shariah-compliant institution Noor Bank.

In Saudi Arabia, however, National Commercial Bank and Riyad Bank ended their merger talks in December without revealing any reasons.

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