Consolidation in the regional banking industry in necessary, according to Al Salam Bank chairman Mohammed Ali Alabbar.

Speaking after Al Salam Bank shareholders had given the go ahead for the bank's BD27 million ($71.7 million) all share takeover bid for Bahraini Saudi Bank (BSB) at an extraordinary general meeting at the Ritz-Carlton Bahrain, Hotel and Spa yesterday, he said that while such moves in the market were ultimately up to shareholders he believed that consolidation would be good for the regional industry.

That was a view echoed by the bank's chief executive officer Yousif Abdulla Taqi who revealed that the bank was looking for further acquisitions this year, preferably in Bahrain.

He said that he was confident that BSB shareholders would accept the Al Salam offer, even though it was less than its current stock market value.

'We have had extensive discussions with BSB and we both appreciate that the merger will allow both banks to complement each other,' he said.

'It will increase our branch network from two to eight and I am confident the move will add value to both entities.'

He said that future acquisitions were a priority for Al Salam, with Bahrain the target.

'The only way to grow is through acquisition and we will be looking at other opportunities in the near future.'

He said the bank was looking to make acquisitions of up to BD50 million and that the bank's shareholders had agreed to a proposal to increase its share capital from 1.2 billion shares at a nominal value of 100 fils to 2 billion shares.

That would be used to fund future acquisitions. Analysts have argued that the Al Salam offer of one of its shares for every two of BSB undervalues the bank by about one-third, but Al Salam remains optimistic about success in this deal which will now go to BSB for shareholder approval.

The deal is subject to regulatory approval if the BSB shareholders give it the go ahead.-TradeArabia News Service