KHCB and Bank Alkhair inch closer towards merger - IFN

KHCB and Bank Alkhair inch closer towards merger

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BAHRAIN: In an announcement made to the Bahrain Bourse yesterday, Khaleeji Commercial Bank (KHCB) disclosed that the financial due diligence conducted for its merger with Bank Alkhair is expected to conclude within the next two weeks. Following the completion of the due diligence process, the transaction will subsequently be reviewed for the next course of action. KHCB and Bank Alkhair first explored the prospects of a merger in June 2013, after contracting an MoU to evaluate the feasibility of a fusion to create a larger financial institution. A steering committee from both banks was set up to conduct the valuation and due diligence process, which was commenced in December last year. Subject to obtaining respective shareholder approvals and necessary regulatory consent, the committee will proceed to carry out the merger transaction. Based on industry reports, the transaction will most likely involve cash and the exchange of shares. The merger is projected to offer a wider retail banking exposure and more stable revenues for Bank Alkhair as well as assist in KHCB’s expansion strategies. The merged entity is said to create a financial institution with a paid-up capital of approximately US$500 million and assets of up to US$1 billion. Following the success of the deal, KHCB is expected to remain listed on the Bahrain Bourse. In order to achieve fair competition between Islamic and conventional banks, the governor of the Central Bank of Bahrain, Rasheed Mohammed Al Maraj, last year urged for more mergers between financial institutions. This has thus far resulted in a positive response: with the latest deal following hot on the heels of the recent successful merger between Al Salam Bank and BMI Bank.