Chairman of Kuwait Finance House (KFH) Hamad Abdulmohsen Al-Marzouq said KFH’s purchase of Bahrain’s Ahli United Bank (AUB) is expected to boost consolidated profit for the group.
Al-Marzouq also noted that the procedures for KFH’s acquisition of AUB are moving forward as all relevant studies conducted by Goldman Sachs, JPMorgan, Bank of America Merrill Lynch and Alshall Consulting Co. have confirmed the positive financial viability of KFH for this acquisition.
The expected increase in KFH’s consolidated profit is more than 90 percent compared to 2018 profits, as the merger will create the largest banking entity in Kuwait and the sixth largest bank in the Gulf region.
KFH, after the merger, is set to be one of the largest Islamic banks globally and regionally with assets of more than $94 billion and equities exceeding of $10 billion.
Al-Marzouq added that the merger will increasing the Bank’s lending capacity by 61 percent after acquisition, which will enhance its ability to finance infrastructure and large projects locally and regionally through reducing costs, and allowing it to tap new markets such as Egypt and the United Kingdom.
The banks, which have been undergoing merger talks since mid-2018, when they agreed on a preliminary exchange ratio of one KFH share for every 2.326 AUB shares. They have not revealed the share prices for the exchange ratio.
Al-Marzouq said shares would be issued equivalent to about 53.96 percent of KFH’s current shares. In addition, it will improve the quality of assets and the distribution risks, in particular the geographical distribution.
“In terms of employment, the ‘new entity’ will be able to create additional large employment opportunities for citizens, especially young graduates, with the number who enter the market reaching thousands every year. Thus, the ‘merged bank’ will be able to play a more vital role in this range”, Al-Marzouq explained.
