The announcement, which follows the approval of the shareholders of both banks during separate Extraordinary General Meetings, is subject to final regulatory and legal approvals.
Ithmaar Bank board member Khalid Abdulla-Janahi, who chaired the Ithmaar Bank EGM, said the merger was in line with the bank’s commitment to concentrating on further developing its core business and continuing its growth.
“The Ithmaar Bank-First Leasing Bank merger involves a 4:1 share swap, and has a nominal value of approximately $60million,” Janahi, said.
“The merger, which will increase Ithmaar bank’s paid up share capital from $701million to $758million, will enhance Ithmaar’s capital base as well as its Capital Adequacy Ratios. It will also improve Ithmaar shareholders’ profile,” he added.
“The merger will also consolidate Ithmaar Bank’s position as an Islamic retail bank and create powerful new synergies, improving efficiencies and reducing costs,” said Janahi. “Ultimately, this translates into a renewed focus on developing Ithmaar Bank’s core business of retail and commercial banking operations and on fuelling its continued growth” he said.
“Following the merger, First Leasing Bank will be absorbed into Ithmaar Bank’s operations,” said Janahi. “All existing First Leasing Bank employees will be deployed within the Ithmaar Bank network,” he said.
The Board of Directors of both Ithmaar Bank and First Leasing Bank had earlier approved the merger plans and Bahrain’s banking and financial services regulator, the Central Bank of Bahrain (CBB), had given its initial approval. Following the shareholders approvals, the merger plans will be subject to final approval by the CBB as well as the Bahrain Ministry of Industry and Commerce.
“The merger is expected to be completed before the end of the year, after completing all necessary legal formalities,” Ithmaar Bank Chief Executive Officer and Member of the Board, Mohammed Bucheerei, said.
“First Leasing Bank is specialised in offering equipment leasing and, as an Islamic retail and commercial bank, Ithmaar Bank already has a significant leasing portfolio,” Bucheerei, said.
“Merging these two operations will create unique opportunities for further developing Ithmaar’s core business while reducing costs and improving efficiencies,” he said.
Since Ithmaar Bank’s reorganisation in April 2010 with its then wholly-owned subsidiary, Shamil Bank, and its subsequent transformation from an investment bank into an Islamic retail Bank, Ithmaar has focused on developing its retail and commercial banking operations. This is in line with the Ithmaar board-approved vision of becoming a premier Islamic retail bank.