London-based United Bank of Kuwait (UBK) and Bahrain-based Al-Ahli Commercial Bank are to merge within the next three months to create a new offshore banking unit (OBU) which will be headquartered in Manama. The deal has been agreed by the boards of the two banks, and will now go before shareholders and the UK and Bahraini regulatory authorities for final approval. An exchange ratio between the shares of the two banks has been agreed, but has yet to be disclosed. UBK already holds a 22.5 per cent stake in Al-Ahli.
Both UBK and Al-Ahli will continue their current operations in the UK and Bahrain, as wholly-owned subsidiaries of the new OBU, for which a name is to be announced soon.
UBK group chief executive officer Adelel-Labban says the move is part of a strategy of lowering the bank's risk profile through a wider distribution of its investment products. 'The best way to do this was to team up with a bank with a good retail business and a strong technological base which is using its retail network to develop its investment products. Al-Ahli Commercial Bank fulfils all these criteria.' He says this dovetails with UBK's status as a bank with well-established roots in Western markets.
'By merging with UBK, Al-Ahli will gain access to UBK's range of private and Islamic banking and trust services, which can be extended to our customer base. These include important services and products which we currently do not offer, and will give us access to international bank presence in London and New York,' said Al-Ahli chairman Mohammed Jalal.
UBK chairman Fahad al-Rajaan described the link-up with Al-Ahli as a critical next step in the London-based bank's plans to expand in the GCC. 'The coming period will usher in a phase of deregulation into the banking sector and we want to be strongly placed to take advantage of the opportunities that will be afforded,' he said.
UBK's assets stood at $2,568 million at the end of June 1999; those of Al-Ahli were $816 million at the end of 1998.
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