KFH Said in Talks for Bahrain Ahli United Bank, Kuwait Unit

  • Deal would create lender with about $85 billion of assets
  • Lower oil prices are forcing Gulf lenders to consolidate

Kuwait Finance House KSCP is in talks to buy Bahrain’s Ahli United Bank BSC, a person familiar with the matter said, in a deal that would create one of the Middle East’s largest Islamic lenders with about $85 billion of assets.

KFH, as the lender is known, started discussions to acquire the Bahraini lender as well as its operations in Kuwait, the person said, asking not to be identified because the information is private. There is no guarantee that a deal will take place and final agreements haven’t been reached with any of the parties, the person said.

Lower oil prices are forcing Gulf lenders to consolidate for scale and to better compete in a crowded market. Abu Dhabi lenders National Bank of Abu Dhabi PJSC and First Gulf Bank PJSC recently merged to create a regional powerhouse with $175 billion of assets. Qatar’s Masraf Al Rayan QSC is planning to combine with unlisted Barwa Bank QSC and International Bank of Qatar QSC in a three-way merger to create the country’s largest Islamic lender.

Ahli United in Bahrain declined to comment. A KFH official said he had nothing to add to comments made in a statement on May 21 that said the bank is studying a number of strategic alternatives to maximize its profitability and consolidate its position. It denied taking any decision in response to a Bloomberg report earlier this month that said KFH is in talks to buy Ahli United’s Kuwait operations.

Banking Assets

KFH had $53.9 billion of assets at the end of March, while Ahli United had about $31.5 billion, according to data compiled by Bloomberg. KFH shares, listed on the Kuwait stock exchange, have lost 0.6 percent so far this year, giving the lender a market value of $9.3 billion. Ahli United shares, which are cross-listed in Kuwait, have jumped 16 percent so far this year, giving it a $5.57 billion market capitalization.

AUB shares cross-listed in Kuwait advanced 0.5 percent to 0.205 Kuwaiti dinar as of 11:58 a.m. local time, while KFH fell 0.4 percent to 0.486 dinar.

    Before it's here, it's on the Bloomberg Terminal.