BMI Bank, a Bahrain-based associate of bank muscat, announced that it has agreed, in principle, in favour of a merger with Al Salam Bank Bahrain (ASBB), an Islamic bank incorporated in Bahrain, bank muscat said in a filing to the MSM on Thursday.
"The completion of the transaction, including the final share-swap ratio, is subject to satisfactory due diligence as well as regulatory and shareholder approvals," bank muscat said.
bank muscat owns 49 per cent of shares in BMI Bank.
In a press release, BMI Bank said that the board of directors of BMI Bank and ASBB announced their in principle agreement to proceed with discussions to merge the two banks to create the third largest bank in Bahrain.
Sheikh Khalid al Mashani, chairman of bank muscat and BMI Bank, and Shaikha Hessa Khalifa, chairperson of ASBB, jointly said that the consolidation was the only way forward for Bahraini banks to stay competitive in the aftermath of the recent financial crisis and resulting economic downturn.
The new entity would create the third largest bank in Bahrain by assets and will have a significantly higher underwriting capacity with total assets of approximately BD1.7bn and shareholdersÕ equity of approximately BD293bn, according to a BMI Bank press release posted on its website.
Both Jamal al Hazeem, CEO of BMI Bank, and Yousif Taqi, CEO of ASBB, said that the merger would enable the new entity to offer a wider range of unique and innovative financial products and services to their customers.
"The new entity would become a strong player within the region and would significantly improve shareholder value through the enhancement of revenue and rationalisation of costs," the press release said. The two banks have created a committee to finalise the details and mechanics of the merger.
BMI Bank currently operates in Bahrain through a network of ten branches and 28 ATMs while ASBB operates in Bahrain through a network of ten branches and 20 ATMs.