The merger of Kuwait Finance House (KFH) with Ahli United Bank (AUB) of Bahrain will no doubt further strengthen the Middle East financial landscape by creating one of the largest Islamic financial institution with assets exceeding $92 billion.
The merger, announced last week, had long been rumoured in the industry as Kuwait’s strong financial position enables it to create an even stronger and larger lending market.
The region as seen an increasing number of mergers in recent years, though KFH is poised to create the largest lender of ethical banking operations.
First Abu Dhabi Bank was recently created in the United Arab Emirates (UAE) as the result of the merging of two Abu Dhabi lenders. More mergers are underway in Qatar and Saudi Arabia.
However, the difference between these and KFH is that the previous are a result of “over-banking” in the region as central banks call for consolidation. Financial conditions in Qatar are not the same as in Kuwait, one can be sure.
KFH has no such issues in Kuwait and the other countries in which it operates as it has long led the region in lending and ethical banking services.
KFH was the first Islamic bank ever established and is an undisputed international pioneer in Islamic banking services and is focused on providing ethical banking solutions for its customers. KFH offers customers a suite of innovative, Sharia-compliant financial solutions to meet the needs of the ever-changing financial environment.
KFH has strengthened its digital platforms and mobile payment systems as a result of the booming financial technology (fintech) sector, which includes blockchain technology.
Islamic scholars have declared that digital currencies such as bitcoin are more halal or compliant than paper money because of the lack of debt.
Early independent research conducted by Goldman Sachs, JPMorgan, and Al-Shall Company has found that the merger would be in the best interest of staff, customers, shareholders, and the larger public in the region by providing a wider range of ethical banking services.
Additionally, Moody’s Investors Service anticipates a significant increase in profitability for KFH as a result of the merger, as it will improve the quality of assets and further diversify the distribution of risk.
Regulators, ratings agencies, international financial institutions have all praised the KFH merger. It is not whether the merger will be successful, but how ultimately successful it will be as KFH becomes the largest ethical lender in the region. Given KFH operations in Kuwait and other countries, all indicators point to great success.