Kuwait Finance House seeks merger with Bahrain's Ahli United Bank

Kuwait Finance House (KFH) has invited Bahrain’s Ahli United Bank (AUB) to begin a due diligence process for a potential merger, in a deal that could lead to creation of a new Islamic lender worth nearly $90 billion in combined assets.

KFH also asked Ahli United Bank to sign a non-disclosure agreement.

“Ahli United Bank has been approached by Kuwait Finance House to consider approving the execution of a memorandum of understanding & confidentiality of information to organize the necessary valuation, due diligence and other steps required to combine the respective businesses,” AUB said in a statement to Bahrain Bourse.

The deal is expected to happen through a share-swap and is subject to both banks agreeing to fair exchange ratio of their shares, in addition to other regulatory approvals, it said.

If the merger goes forward, the total assets of the two banks would be $90.57 billion, making it the sixth largest bank in the Gulf by assets, according to Reuters.

Recently, a number of banks in the region have opted to join forces to create bigger and stronger lenders.

Two of the biggest lenders in Abu Dhabi – First Gulf Bank and National Bank of Abu Dhabi – have already come together to form First Abu Dhabi Bank.

In Saudi Arabia, the merger process of Alawwal Bank and Saudi British Bank (SABB) is currently under way.