KFH considering strategic option with AUB

Hamad Al-Marzouq

KUWAIT: Kuwait Finance House (KFH) Chairman Hamad Abdulmohsen Al- Marzouq said the Bank is currently deliberating with Ahli United Bank – Bahrain (AUB) the possibility of creating one of the largest Islamic banks in the Middle East. This step comes in line with KFH’s strategy of growth and expansion in the region and the world.

Marzouq added in a press release, that the financial and economic circumstances in the region necessitate thinking seriously about such directions which aim to create large financial entities that are capable of withstanding shocks, while having financial capacity and internal resources to compete regionally and globally, yet maintaining a strong capital base.

He noted the expectation of having positive benefits with this strategic move be it at the level of improved profitability or asset quality or at the level of risk diversification and geographical distribution, which would be reflected on KFH and AUB along with their respective shareholders.

Marzouq stressed that the advantages of creating a large entity would enable the Bank to play an active role in providing advanced Islamic banking services to its customers as well as the ability to provide the proper financing for mega projects both inside and outside Kuwait. Creating large banks comes in line with the consolidation of Kuwait’s position as a regional financial hub and in line with translating the wise vision of His Highness Sheikh Sabah Al-Ahmad Al-Jaber Al-Sabah, the Amir of Kuwait, and the Kuwait “2035 vision” of transforming Kuwait into a regional financial and commercial hub.

He added that the study of this strategic option will be implemented in multiple stages. The first stage is the evaluation study by international consultants in this field in order to determine the initial fair trade price between the shares of AUB and the shares of KFH based on their published financial statements.

The second phase will be the due diligence assessment on the two banks in case they agreed on the initial exchange ratio. The Central Bank of Kuwait, Central Bank of Bahrain and other regulatory authorities will be contacted for the necessary approvals before the due diligence procedures begin.

In the event of completing the two phases and the agreement of the two banks on their results, the third and final phase requires preparation of the future business plan for the new banking entity and the executive procedures, whether in Kuwait or in the Kingdom of Bahrain or in any other country. He concluded: “The final approvals for the acquisition will be subject to the approval of the Central Bank of Kuwait and other regulatory authorities as well as the general assemblies of the two banks.”

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