June 30 (Bloomberg) -- Shareholders of Bahrain’s Capivest BSC, Elaf Bank BSC and Capital Management House BSC approved a merger of the three Islamic financial institutions as competition intensifies in the Persian Gulf’s state.
The merger, which still needs approval from the kingdom’s Central Bank and Ministry of Trade and Commerce, will create an entity with equity of almost $350 million and assets of more than $400 million, Kuwait Finance House Bahrain BSC said in an e-mailed statement today.
The move aims “to establish a strong banking institution that is able to compete solidly in a changing market,” Elaf Bank’s Vice Chairman Isa Habib said, according to the statement.
Bahrain is home to the largest number of Islamic banks in the Persian Gulf and the only nation in the six-member Gulf Cooperation Council to issue domestic Islamic bills maturing in less than a year, according to central bank data. The Accounting & Auditing Organization for Islamic Financial Institutions, a standard-setting body, is also based in Bahrain.
Bahrain Islamic Bank, the second-biggest Shariah-compliant lender in the nation, in February ended talks with Al Salam Bank BSC over a possible merger that would have created a lender with a market value of $400 million. Al Salam completed legal requirements for its merger with Bahrain Saudi Bank BSC on April 25, according to a June 10 statement on the country’s bourse website.
The three lenders appointed Kuwait Finance House in Bahrain to act as adviser, Trowers & Hamlins as legal counsel and Deloitte as independent valuer, according to the statement.
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