BMI and Al Salam Bank tie-up to create the fourth-largest bank in Bahrain - IFN

BMI and Al Salam Bank tie-up to create the fourth-largest bank in Bahrain

Daily Cover

BAHRAIN: Following an in-principle agreement in May, Al Salam Bank and BMI Bank have decided to merge via a share-swap deal. According to a joint statement released by both banks, the much-anticipated tie-up will create the fourth-largest commercial bank in Bahrain. Board of directors for both banks have resolved that the consolidation will be executed through the exchange of 11 of Al Salam’s shares for every one of BMI’s shares. The terms of the merger stipulates that Shariah compliant Al Salam would acquire 58.5 million shares from BMI at BHD1 (US$2.63) per share, and following that, will issue 644 million shares at 100 Bahraini fils (US$0.26) each. Shaikha Hessa Khalifa, the chairperson of Al Salam’s board of directors, said that the deal is subject to the approval of the bank’s shareholders and will be tabled during the next extraordinary general meeting. In pursuance of the consolidation, both banks are currently working closely in drafting a post-merger integration plan and looking to expedite regulatory approvals. Hessa noted that the unification is part of Al Salam’s expansion strategies, both locally and globally. Upon completion, the merged entity will have 19 retail branches and 44 automated teller machines. Commenting on the deal, BMI’s chairman, Shaikh Khalid Mustahail Al Mashani said: “The combined entity will become an economically significant entity in the domestic market and position itself to expand regionally.” He further explained that in light of the saturated local market, consolidation is deemed necessary in order to create larger and stronger financial institutions that are able to compete both locally and regionally. In the first half of 2013, Al Salam recorded a net profit of US$15.88 million signifying an improvement from a loss of US$2.14 million in the corresponding period last year. BMI, on the other hand, reported a net profit of US$1.4 million, charting a 100% growth from its half-year results of US$700,000 in 2012.