Monday, April 28, 2014

Mounting evidence points towards possible AUB-KFH merger


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KUWAIT: Over the past few weeks, industry reports have again suggested that Ahli United Bank (AUB) is on the lookout for acquisitions and could possibly be involved in a US$5 billion sale or merger deal. Today, Islamic Finance news (IFN) takes a look at this proposition and evaluates its feasibility.

Based on the chronology of events, AUB shareholders first suggested selling the bank in 2010. Due to undisclosed reasons, the sale failed to materialize. The premise was revisited again in March this year, when a local daily reported that AUB was on the lookout for acquisitions to expand and develop its existing banking franchise in the GCC. The bank’s chairman, Fahad Al Rajaan, reportedly said that the bank’s management was confident in its continuing good performance which will be boosted by the growth in economic activity in the region.

A few weeks later, Reuters reported that AUB was again contemplating a sale or merger with another bank, in a possible US$5 billion deal. Following this, a press statement was released by the bank which neither confirmed nor refuted the claim. The statement iterated that it was unable to comment on the matter as no official announcement had been made at the time.

As reported earlier this week Hamad Al Marzouq, then deputy chairman and managing director of AUB, resigned from his post and submitted his nomination papers to run for Kuwait Finance House (KFH) board membership, a day before nominations closed. Local dailies reported yesterday that Mohammed Sulaiman Al Omar, CEO of KFH, has also resigned from his post, with suggestions that Anwar Al-Ghaith, currently the chief operating officer at KFH, would take up the role on an acting basis. IFN understands that a number of departures can be expected in the coming weeks, as sources suggest that this is not the end of the reorganization exercise. According to a local news wire, a likely contender for the position of CEO at KFH is Basel Ahmad Al Haroun, the commissioner of the Capital Markets Authority.

In the previous months, IFN reports on other KFH changes include the appointment of Hamad Al Marzouq and Abdul Aziz Al Nafeesi as board chairman and vice-chairman, respectively. Elections to the new board also comprise of Khaled Al Nesf, Moath Al Ossaimi, Fahad Al Ghanem, Nour Abed, and Abdul Mohsen Al-Kharafi as well as substitutes Youssef Al Saqr and Bader Al-Rabeea (see Vol. 11 Issue 14).

Due to Hamad Al Marzouq’s experience and track record and in light of these recent events, industry observers have speculated that a merger between AUB and KFH could be in the pipeline, giving KFH a bigger footprint. It has been put forth that due to the Shariah compliant nature of both financial institutions, the potential merger may occur between AUB Kuwait and KFH, with the latter taking a prominent position.

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