Bahrain-based Islamic retail bank Ithmaar has announced plans to merge with one of its associates First Leasing Bank (FLB) after the bank got approval from its shareholders.

Announcing this on Sunday, Ithmaar Bank board member Khalid Abdulla-Janahi, who chaired the Ithmaar Bank EGM, said the merger is in line with the bank’s commitment to concentrating on further developing its core business and continuing its growth.

“The Ithmaar Bank-First Leasing Bank merger involves a 4:1 share swap, and has a nominal value of approximately $60million,” said Janahi.

“The merger, which will increase Ithmaar Bank’s paid up share capital from $701million to $758million, will enhance Ithmaar’s capital base as well as its Capital Adequacy Ratios. It will also improve Ithmaar shareholders’ profile,” he said following the approval from the shareholders of both banks to go ahead with the merger.

“The merger will also consolidate Ithmaar Bank’s position as an Islamic retail bank and create powerful new synergies, improving efficiencies and reducing costs,” remarked Janahi.

“Ultimately, this translates into a renewed focus on developing Ithmaar Bank’s core business of retail and commercial banking operations and on fuelling its continued growth” he added.

“Following the merger, Bahrain-based FLB will be absorbed into Ithmaar Bank’s operations and all existing employees will be deployed within the Ithmaar Bank network,” said Janahi.

The Board of Directors of both Ithmaar Bank and First Leasing Bank had earlier approved the merger plans and Bahrain’s banking and financial services regulator, the Central Bank of Bahrain (CBB), had given its initial nod.

Following yesterday’s shareholder approvals, the merger plans will be subject to final approval of the CBB as well as the Bahrain Ministry of Industry and Commerce.

“The merger is expected to be completed before the end of the year, after completing all necessary legal formalities,” said Ithmaar Bank CEO and member of the board, Mohammed Bucheerei.
 
“FLB is specialised in offering equipment leasing and, as an Islamic retail and commercial bank, Ithmaar Bank already has a significant leasing portfolio,” observed Bucheerei.

“Merging these two operations will create unique opportunities for further developing Ithmaar’s core business while reducing costs and improving efficiencies,” he added.

Since Ithmaar’s reorganisation in April 2010 with its then wholly-owned subsidiary, Shamil Bank, and its subsequent transformation from an investment bank into an Islamic retail Bank, Ithmaar has focused on developing its retail and commercial banking operations.

This is in line with the Ithmaar board-approved vision of becoming a premier Islamic retail bank.-TradeArabia News Service