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MANAMA: National Bank of Bahrain (NBB)’s share purchase offer to Bahrain Islamic Bank (BisB) stakeholders will open on Wednesday.
In disclosures to the Bahrain Bourse, Bahrain’s largest Sharia-compliant lender has said the initial closing date for the offer is January 2, 2020.
The conventional lender is offering to acquire up to 100 per cent of the issued and paid-up ordinary shares of BisB in exchange for either cash of 117 fils ($0.31) per share or through new shares in NBB at a share exchange ratio of 0.167 NBB shares per BisB share.
The voluntary conditional offer is subject to a minimum acquisition of 40.94pc, which will raise NBB’s total ownership of the issued share capital of BisB to a minimum of 70pc.
Following the announcement, trading in BisB shares on BHB was suspended yesterday and will remain suspended until one business day after the offer settlement date.
According to Reuters data, NBB is the second largest Bahraini bank by market capitalisation, while BisB is the eighth largest.
The proposed takeover by National Bank of Bahrain is credit positive for BisB, according to credit ratings agency Moody’s.
Analysing the deal based on the offer price disclosed by NBB, Moody’s feels its acquisition by NBB would be credit positive for the Sharia-compliant lender because it would give the Islamic bank access to NBB’s strong capitalisation, ample liquidity and a large customer base.
NBB is one of the largest retail banks in Bahrain, with around a 12pc market share by total system assets, and is largely owned by the government – 55pc through Mumtalakat and Social Insurance Organisation (SIO).
It is also the single largest shareholder in BisB with a 29pc stake (the government also indirectly owns a 29pc stake through SIO).
Moody’s has opined that while the acquisition of BisB would reduce NBB’s capitalisation, the transaction will still benefit NBB by providing access to customers interested in Sharia-compliant products at a time when demand for Islamic financial services is rising in GCC countries.
Islamic finance penetration of systemwide loans are as high as 77pc for Saudi Arabia and 70pc for Bahrain.
The agency expects demand from both corporate and retail clients for Islamic finance to increase and NBB’s takeover of BisB would position NBB to take advantage of this.
In addition to the potential operational efficiencies between the two entities, there is scope for significant synergies on the revenue side, although it is too early to quantify them.
The GDN reported on November 5 that NBB had disclosed the offer price for the voluntary conditional offer to acquire up to 100 per cent of Bahrain Islamic Bank through a share swap or cash offer.
NBB first announced in October 2018 that it was considering buying shares in BisB.
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