Kuwait Finance House will take up to three years to convert Ahli United Bank to become fully Shariah-compliant, Group CEO Mazin Saad Al-Nahedh told reporters on Monday.
KFH shareholders on Monday approved the acquisition of Bahrain’s Ahli United Bank (AUB), a step closer to the completion of the region’s first cross-border merger in recent years at a time when several other banks are consolidating. The acquisition is now subject to the approval of AUB’s extraordinary general assembly on the full acquisition of its shares based on the determined swap ratio of 2.325581 of AUB shares for 1 KFH share.
Hamad Abdulmohsen Al-Marzouq, the Chairman of KFH, said that the merged entity would have assets of $101 billion and shareholder equity of $10.5 billion, with an annual forecast profit of $1.5 billion, based on past performance.
The shareholders agreed on the acquisition of 100 per cent of the capital shares of AUB by way of share swap at an exchange ratio of one KFH share for every 2.326 AUB shares.
“This acquisition represents a powerful engine for growth and prosperity in the future of KFH, providing access to many new markets in Britain, UAE, Oman, Iraq and Egypt and strengthening the position of KFH in its current markets,” said Al-Marzouq. “The acquisaition of AUB will turn KFH into a direct investment and banking destination, reducing group costs across its markets, enhancing the efficiency of resources allocation and increasing profitability.”
In a bourse filing, KFH stated that its shareholders also approved the listing of the bank on Bahrain Bourse and authorised the Board of Directors to set the date of the listing. KFH will convert all of AUB’s conventional assets to become Islamic following the clearance of all approvals.
AUB’s Shariah-compliant assets in 2018 reached 43% of its “total budget”, said KFH Capital Investment Deputy Chairperson Shadi Zahran, according to a transcript of the press conference filed with Boursa Kuwait.
The Kuwaiti bank’s Group CEO said the first phase of AUB’s conversion will involve AUB-Bahrain and AUB-Egypt and will take between six and twelve months. The conversion of AUB-Britain will also take the same period of time.
Al Nahedh said KFH expects to finish the whole process of conversion between 18 and 24 months, with full transformation taking three years. The AUB name will be retained, said KFH, but the trademark might be changed in the future.
The merged bank will have assets of $101 billion and an annual profit forecast of $1.5 billion based on past performance, according to KFH.
For the most recent reported full-year results, KFH posted net profit of 227.4 Kuwaiti dinars ($749.12 million) in 2018, up 23.5%. AUB’s profit jumped 12.7% to $697.5 million in 2018.
Source Salaam Gateway