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GFH mulls KHCB merger with kingdom's banks

MANAMA: Further bank mergers in Bahrain could be on the way this year with Gulf Finance House (GFH) confirming it is studying options to merge its affiliate, Khaleeji Commercial Bank (KHCB), with other Bahraini banks.

GFH, which has undergone a number of debt restructurings since 2009, currently owns 47 per cent of KHCB, which would be worth around $61.8 million at current market value.

"GFH is currently studying a number of options to merge Khaleeji Commercial Bank with other banks in Bahrain to create a bigger and stronger bank," GFH said in a statement on the Bahrain Bourse website.

It did not say which Bahraini banks it was considering as merger partners.

Bahrain has seen some merger attempts in recent months as lenders react to the global financial crisis and the end of the real estate boom in the kingdom where many small banks are reliant on fees earned from managing property and land investments.

Capivest, Elaf Bank and Capital Management House in Bahrain have completed their three-way merger, creating a bank with total assets worth over $400m.

Bahrain Islamic Bank and Al Salam Bank said in February 2012 that merger talks between the two to form Bahrain's biggest Islamic bank by assets had collapsed because of disagreement on pricing.

Authorities in Bahrain have long argued that banking consolidation is necessary for future growth as there are too many small banks that do not have the capability to address regional markets in competition with global banking interests.

Gulf bank mergers are uncommon because main shareholders, often local families, are reluctant to cede control.

GFH announced it is also considering the acquisition of a number of assets in Saudi Arabia and the UAE that will generate high secured yields.



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