National Bank of Bahrain (NBB) and Social Insurance Organisation Asset Management Company (SIOAM) have announced that they were taking a controlling stake in Bahrain Islamic Bank (BisB).

The two financial institutions said they had agreed terms with The Investment Dar (TID) of Kuwait to purchase its and associated companies' shareholding of 51.6 per cent in BisB, according to a report in our sister publication, the Gulf Daily News.

The shares are to be purchased by NBB and SIOAM at 72 fils per share which gives BisB a value of around BD70 million ($184.65 million).

The purchase is subject to obtaining the required regulatory approvals for the transaction as well as agreement on final documentation between the various parties. NBB and SIOAM will each acquire 25.8pc of BisB's shares with this transaction.

In November last year, NBB and SIOAM had announced that they were commencing due diligence on this purchase.

"This investment represents a strategic initiative for NBB," said NBB chief executive Abdul Razak Al Qassim.

"We have been looking for an appropriate opportunity to establish a footprint in the Islamic banking industry and BisB represents a suitable vehicle for us.

"BisB's strengths in Islamic banking and its sound retail franchise will complement our business. We expect to be closely involved with SIOAM and other stakeholders in the future growth of BisB," Al Qassim said.

"We are happy to conclude this transaction on behalf of our clients," said SIO Asset Management chief executive Shaikh Abdulla Khalifa Al Khalifa.

"We are committed to investing in sound Bahraini businesses and BisB is an illustration of that. BisB presents excellent value for money and is a major player in the Islamic banking sector. We will be working with NBB and other stakeholders to build the business further."

Last week the GDN announced that NBB had been in takeover talks with the loss-making bank, which was the first Islamic bank in Bahrain, and was set to buy the operation to give itself an Islamic finance arm.

"We are in talks with BisB and we expect to make an announcement next week," said NBB chairman Farouk Almoayyed in an interview with the GDN on the sidelines of his bank's annual meeting.

"We see this as a business opportunity as we do not have an Islamic banking operation and under our management and we believe it will do well."

Last year, BisB posted a net loss of BD36 million compared with a net loss of BD17 million for 2011.

But this was after increasing its provisions portfolio by BD41 million.

Meanwhile, BisB yesterday welcomed the deal.

"These two entities have a strong market recognition and entertain full respect in the banking and financial circles in Bahrain," a spokesman for BisB said.

"This is to be considered one of the major strategic acquisitions occurring in Bahrain, taking into consideration its size, and assert that it will contribute greatly to support the bank's growth the enhancement of shareholders' representation.

"The bank now looks towards rebounding to profitability and growth in a short time. The bank would also like to thank all governmental agencies which helped bring this transaction to success,” he added. – TradeArabia News Service