The boards of BMI Bank and Al Salam Bank Bahrain have reached an in-principle agreement to proceed with discussions for a merger, which will create the third largest bank in the kingdom, said a joint statement by the banks.

BMI Bank chairman Shaikh Khalid bin Mustahail Al Mashani and Al Salam Bank Bahrain chairperson Shaikha Hessa bint Khalifa bin Hamad Al Khalifa jointly stated that consolidation was the only way forward for Bahraini banks to stay competitive and financially strong in the aftermath of the recent financial crisis and resulting economic downturn, reported the Gulf Daily News, our sister publication.

The proposed entity will benefit from a collective pool of resources both in terms of management talent, customer base as well as superior products and services in addition to a strengthened delivery network.

This will also create a stronger player in the market place across core business including retail, wholesale, small and medium enterprises, private and investment banking and wealth management.

The new entity would create the third-largest bank in Bahrain by assets and will have a significantly higher underwriting capacity with total assets of approximately BD1.7 billion ($4.48 billion) and shareholders' equity of approximately BD293 million.

BMI Bank chief executive Jamal Al Hazeem and Al Salam Bank Bahrain chief executive Yousif Taqi said that the merger would enable the new entity to offer a wider range of unique and innovative financial products and services to their respective customer base.

The new entity would become a strong player within the region and would significantly improve shareholder value through enhancement of revenue and rationalisation of costs, they said.

The merger is subject to obtaining the respective shareholders' approval and seeking the necessary regulatory consents.

The two banks have created a committee to finalise the details and mechanics of the merger.

BMI Bank currently operates a network of 10 branches and 28 ATMs in the kingdom, whereas Al Salam Bank Bahrain operates a network of 10 branches and 20 ATMs. – TradeArabia News Service