Al Salam Bank Plans to Acquire Kuwait Finance House-Bahrain

Bahrain-based Al Salam Bank evincing interest in acquiring the entire shares of Kuwait Finance House, the second largest Islamic bank in the world after Saudi Arabia’s Al Rajhi Bank in the GCC region.

In a filing with Dubai Financial Market (DFM) on Monday, where Al Salam Bank’s shares are traded, Ali Yusuf Al Khaja, Head of Compliance & MLRO of Al Salam Bank, said that they were in discussions with Kuwait Finance House, for the potential acquisition of the entire shareholding in Kuwait Finance House – Bahrain KFH Bahrain) by Al Salam Bank in collaboration with an investor. However, he did not disclose the name of the investor.

He also said that Al Salam Bank has signed a non-binding letter of intent with KFH Group in collaboration with an investor to commence preliminary discussions, negotiations, and due diligence for the acquisition, one of two banking licenses currently held by KFH Group in the Kingdom of Bahrain.

“Further details of material developments will be announced in due course subject to due diligence, agreement on commercial terms and obtaining relevant approvals in accordance with regulatory and legal requirements,” he said and added that the financial implications of the proposed deal for this financial year will be disclosed in due course.

Financially Sound

According to Kuwait Finance House’s latest financial reports the company’s current revenue is $4.27 billion. The company made a revenue of $3.37 billion in 2022, an increase over 2021 revenue, that stood at $2.7 billion.

As of November 2023, Kuwait Finance House has a market cap of $33.07 billion and this made Kuwait Finance House the world’s 520^th most valuable company by market cap.

Kuwait Finance House has reported record net profit for its shareholders of $1.086 billion for the first half of 2023, an increase of 141.4% compared to the same period last year. The company showed its highest-ever quarterly profit in history and the biggest in the Kuwaiti banking sector.

The total assets as of the end of H1-2023 reached $119.88 billion, an increase of $165.16 million compared to the end of last year.

Mergers and Acquisitions

It may be recalled that with the ease of pandemic restrictions and businesses returning to normalcy in the GCC region, consolidation of banks gained pace in Bahrain the last couple of years.

Kuwait Finance House has completed its acquisition of Ahli United Bank (AUB) in October 2022 and consequently created one of the largest banks in the GCC. More than 97% of AUB share acceptances were received, surpassing the minimum requirement of 90% for squeeze-out.

Citibank exited the retail banking business by selling its consumer banking business to AUB in December 2022.

Al Salam Bank also announced in November 2022 that it had completed the acquisition of the consumer banking business from Ithmaar Bank, thus creating one of the largest Islamic banks in Bahrain.