The NBB said in a statement that the consideration of the offer is either in cash of $0.31 per share or through a share-swap deal with a share exchange ratio of 0.167 NBB shares per Bahrain Islamic Bank shares.

The offer is subject to a minimum acquisition of 40.94 percent, which would take NBB’s total stake in Bahrain Islamic Bank up to 70 percent.

The deal to buy Bahrain Islamic Bank is expected to cost NBB around $329 million.

In the statement, NBB also said, “Bahrain Islamic Bank shareholders are notified that NBB is a conventional retail financial institution and as such the new shares in NBB offered as an alternative to the cash offer are not a Shariah-compliant investment.”

Currently, NBB, which is the second-largest bank in Bahrain with a market share of 27.94 percent, is the second-largest shareholder with a 29.06 percent stake in Bahrain Islamic Bank. While the Saudi Arabia-based Islamic Development Bank owns a 14.42 percent stake in Bahrain Islamic Bank, the General Council of Kuwaiti Awqaf holds a 7.18 percent stake.

NBB, which was also the first indigenous bank of Bahrain, first expressed interest in Bahrain Islamic Bank back in October 2018. Earlier in July this year, the bank again announced that it had re-initiated talks with the Islamic lender.

During the same period, NBB chief executive Jean-Christophe Durand revealed the bank’s plan to increase the number of branches in the UAE and Saudi Arabia and is looking to double the size of its debt capital market and advisory business to $10 billion.

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According to the bank, it continues to take the confirmatory financial and legal due diligence process into the Bahrain Islamic Bank. However, Bahrain Islamic Bank, in a statement to the Bahrain Bourse, said it is yet to receive a formal offer from the NBB. It also said that it has cautioned its shareholders and potential investors to exercise caution while dealing with its shares.

The NBB is in talks with Islamic Development Bank to acquire its 14.42 percent stake in Bahrain Islamic. The initial announcement was made last year when NBB said it was considering buying shares in Bahrain’s largest Sharia-compliant lender. But preliminary discussions only began in July 2019.

At the backdrop of a slowing economy, banks in the Middle East are increasingly studying potential merger and acquisitions in a bid to stay competitive and gain market share. Banks, especially in the UAE and Bahrain, are looking to expand locally as well as internationally and explore new markets because of increased competition.

The NBB plans to increase the number of its branches in the UAE and Saudi Arabia. It also plans to increase the size of its debt capital market and advisory business to $10 billion. Currently, it is the second-largest Bahraini bank by market capitalisation.

The National Bank of Bahrain also launched a new financial restructuring business within the bank as part of its ongoing diversification process. The bank wants to increase its participation when it comes to supporting local and regional businesses.

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