Bahrain-based Al Baraka Banking Group, one of the Gulf's top Islamic banks, said its Pakistani unit would merge with Pakistan's Burj Bank to create an institution with assets totalling more than $1.1 billion.

The merger, which was approved by shareholders of the two banks last month and still needs regulatory approvals, would see Burj Bank holders receive one Al Baraka Bank (Pakistan) share for every 1.7 shares in Burj, the Bahraini bank said on Monday.

The merger is expected to take effect from the last quarter of this year, with 74 Burj Bank branches converted into Al Baraka Bank (Pakistan) branches to form a combined network of 224 branches across the country. The Bahraini bank will be the major shareholder in the merged institution.

Burj Bank, one of Pakistan's five full-fledged Islamic banks, attracted interest from several Pakistani institutions and short-listed three to conduct due diligence before agreeing to the merger with Al Baraka.

Currently, the largest shareholders in Burj Bank are Bahrain's Bank Al Khair with a 37.9 per cent stake and the Jeddah-based Islamic Corporation for the Development of the Private Sector, which holds 33.9 per cent.

Bahrain-based Islamic investment bank GFH Financial Group said last month that it had signed a memorandum of understanding to buy a majority stake in Bank Al Khair. – Reuters