MANAMA: Bank of Bahrain and Kuwait (BBK) and Ithmaar Holding, the parent of Ithmaar Bank, have entered into initial talks exploring a potential acquisition by BBK of the Bahrain operations of Ithmaar Bank.
The acquisition also includes specific assets of IB Capital, a wholly-owned subsidiary of Ithmaar Holding, which said in a filing to Bahrain Bourse yesterday that a memorandum of understanding to be executed shortly between BBK and Ithmaar Holding will allow futher mutual discussions on the acquisition terms.
Financial and legal advisers will be appointed in due course to arrange for preliminary due diligence, which is a vital step before further phases can take place, the filing said.
A separate statement said the plans are subject to shareholder and regulatory approvals and still in the preliminary discussions phase.
When implemented, the plans will significantly expand BBK’s already large operations in Bahrain and add a turn-key, full-service Islamic banking solution, while also bolstering the already well-established Ithmaar Bank brand and position it to better capitalise on opportunities for growth.
Details of the plans will be announced in due course, following necessary approvals.
The chairmen of both institutions have welcomed the announcement.
“BBK has long played a key leadership role in Bahrain’s banking and financial services industry,” said the conventional bank’s chairman Murad Ali Murad.
“To maintain this leadership role, and as part of its ongoing business expansion strategy, BBK has been exploring opportunities to expand its activities and diversify its offerings, particularly in Sharia-compliant banking businesses. Ithmaar Bank seems a natural fit, and we look forward to exploring this possible acquisition further,” he said.
“Ithmaar Bank, an Islamic retail bank, played a pioneering role in the establishment and subsequent development of Islamic banking in the region,” said Ithmaar Holding chairman Prince Amr Al Faisal.
“A wholly-owned subsidiary of Ithmaar Holding, Ithmaar Bank is a growing, resilient bank that continues to invest in the future and plays a key role in the community. This transaction is in line with Ithmaar Holding’s strategy of creating value for its shareholders, and we look forward to exploring this possible opportunity further,” he said.
Reporting its half-year results last week, Ithmaar Holding said it was working on various initiatives to improve the capital, including the possible sale or restructuring of non-core assets.
The statement said it would look to “facilitating the sale of underlying, non-core assets of its subsidiaries when suitable opportunities arise.”
Ithmaar Holding was established in 2016 after the shareholders of formerly named Ithmaar Bank approved plans to significantly transform the group’s operations.
It directly owns two major subsidiaries, Ithmaar Bank, which holds the core retail banking business, and IB Capital, an Islamic investment subsidiary which holds investments and other non-core assets. Ithmaar Bank maintains a presence in overseas markets through its subsidiary, Faysal Bank (Pakistan), and locally through Dilmunia Development Fund.
IB Capital maintains a presence in regional and overseas markets through its investments including in associated companies.
These include Bahrain-based BBK, Ithmaar Development Company, Solidarity (an Islamic insurance company), Naseej and Ithraa Capital (Saudi Arabia).
Ithmaar Holding is a subsidiary of Dar Al Maal Al Islami Trust. As per data available on Bahrain Bourse, IB Capital owns 26.06 per cent stake in BBK and is its largest shareholder.
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