Bahrain-based GFH Financial Group (GFH) has said it has withdrawn from discussions for a potential merger with Dubai-listed investment bank Shuaa Capital.

“GFH confirms to its shareholders and the markets that the withdrawal [from talks] was due to both parties not reaching the agreed acquisition terms and not receiving initial regulatory approval yet,” GFH said in a statement to the Dubai Financial Market (DFM), where its shares are traded. “Therefore both parties have agreed to postpone the discussions regarding the acquisition for the time being.”

Both companies in March had confirmed initial talks on combining businesses in separate regulatory filings to the DFM, but said a final decision had yet to be made and the merger was subject to regulatory approvals.

The confirmation on the merger talks follows MEED’s 12 March report that Shuaa was looking for a potential merger with a larger financial institution in a deal that could be worth billions of dirhams.

GFH has, however, said it will continue to pursue its strategy of acquiring financial institutions. “GFH’s strategy to acquire financial institutions is still on track and we will continue to seek strategic opportunities in the future that satisfy shareholders’ expectations and secure diversified business lines and growth prospects for the group,” it said in the bourse filing.

Shuaa Capital, which has yet to issue a statement on the suspension of talks, is following its own expansion plans and is looking to acquire a GCC-based financial services firm other than GFH.

“It’s a listed asset,” Shuaa chairman Jassim Alseddiqi told a press conference in Dubai on 25 April. “We are still discussing the size of the stake,” he added when asked to disclose the ticket size of the potential deal.

Shuaa bought a 14 per cent stake in Khaleeji Commercial Bank (KHCB), a Bahrain-based Islamic retail lender, for $25m. KHCB is a subsidiary of GFH Financial Group, which in May 2016 said it planned to list the lender on the DFM.