NBB acquires 78.8 per cent stake in Bahrain Islamic Bank

The settlement of the offer is expected to take place on 22 January 2020/Shutterstock

The National Bank of Bahrain (NBB), which owns 29 per cent of Bahrain Islamic Bank (BisB), has acquired a 78.8 per cent stake in the Islamic bank, a month after the national bank offered to buy up to 100 per cent of the Shari’ah compliant lender’s paid-up ordinary shares.

The offer which initially opened on 18 December 2019 was launched by NBB in a bid to develop its Islamic banking activities and to offer to its client base a full range of conventional as well as Islamic banking services.

Farouk Al Moayyed, the Chairman of NBB, said, “Increasing our shareholding in BisB will allow us to become more effective in certain markets, especially where Shari’ah-compliant businesses play a vital role.”

In a bourse filing, NBB stated that 93.55 per cent of the acceptances were from institutional shareholders of BisB and the remaining 6.45 per cent were from individual shareholders.

Similarly, 94.95 per cent of all acceptances opted for the cash offer of BHD 0.117 per BisB share, while the remaining 5.05 per cent opted to swap their BisB shares with newly issued NBB shares at a share exchange ratio of 0.167 NBB shares per BisB share.

 “While the two banks will remain independent, I look forward to working with the teams of both banks on the successful implementation of synergies in full respect of the culture of the two institutions,” said Jean-Christophe Durand’s NBB’s CEO.

BisB will remain listed on Bahrain Bourse and the Islamic bank will continue to operate under its normal course of business as well as maintain its operations as a subsidiary of NBB.

The settlement of the offer is expected to take place on 22 January 2020 and all BisB’s shareholders who did not participate in the offer will remain as shareholders with their shareholding unchanged as a result of the offer.

Lower oil prices over the past five years are forcing Gulf lenders to consolidate for scale and to better compete in a crowded market. Subdued credit growth, competition for deposits, higher cost of funds and deteriorating asset quality are driving consolidation in the regional banking sector.

S&P Global said that given the overbanked nature of some GCC banking systems, further consolidation could help improve banks' performance and financial stability hence a new wave of mergers and acquisitions motivated by purely economic reasons could follow, but it may take longer to be realised.