Photo for illustrative purposes only. Aerial view of Manama, Bahrain, in September 2013. Joshua GM/Shutterstock

Islamic Finance

National Bank of Bahrain set to own 78.8% of Bahrain Islamic, both banks to operate independently

Bahrain Islamic Bank will operate as a subsidiary of National Bank of Bahrain after the country’s biggest lender takes over 78.8% majority stake in the Shariah-compliant bank.

NBB previously owned 29.06% of BisB and in November put in an offer to buy a minimum of 40.94% more.

The bank reported in a bourse filing on Sunday (Jan 19) that 49.76% more BisB shares were acquired by NBB, taking its controlling stake to 78.81% of the Islamic bank. The shares purchase is expected to clear on Jan 22, said the bank. 

93.55% of the accepted offers came from institutional shareholders, said NBB.

NBB CEO Jean-Christophe Durand said in a statement that the two banks will remain independent, but he expects the acquisition of BisB to generate “significant synergies, improved efficiencies and contribute to profitability”.

Bahrain Islamic Bank posted a drop in profit of 48.51% for the third quarter of 2019 as impairment costs rose. The bank reported 1.73 million dinars ($4.59 million) in profit for Jul-Sep compared to 3.37 million dinars for the same period in 2018.

NBB’s acquisition of BisB adds to the growing list of GCC banks’ M&A activity.

UAE banks National Bank of Abu Dhabi and First Gulf Bank kicked it off in 2017 when they merged 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.

Most recently in December, Dubai Islamic Bank shareholders agreed to acquire fellow Shariah-compliant institution Noor Bank.

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

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