Shareholders in Bahrain-based Al-Ahli Commercial Bank (ACB) have approved the proposal for the bank to merge with London-based United Bank of Kuwait (UBK).

An as yet unnamed holding company is to be set up and listed in Bahrain, which will wholly-own both institutions (MEED 14:1:00). UBK shareholders will get 67.38 per cent of the holding company's equity, with ACB shareholders taking 32.62 per cent. The allocations are based on the valuations of the two banks: ACB was priced at $162.2 million and UBK at $335.1 million. 'The process was done on a fair-value basis,' says Michael Fuller, chief executive officer of ACB. 'Three elements were taken into account: multiples of total income; adjusted net assets; and peer-group analysis.'

The management structure of the new institution is yet to be finalised, but it is expected that Adel el-Labban, UBK's group chief executive, will be the chief executive and Fuller will stay on at the bank, depending on shareholder approval.

There are also plans for the holding company to stage a capital increase, raisingBD 75.2 million ($200 million), before the end of the year. It is understood that GCC investors will be targeted. 'We want to create a better balance in the bank's shareholder structure,' says Fuller. 'And the capital increase will reflect the group's ambition to add further strings to its bow.'