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Fri 17 Feb 2012 01:08 PM

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Bahrain banks end plans for $4.5bn merger

Bahrain Islamic Bank, Al Salam Bank end talks after failing to reach an agreement

Bahrain banks end plans for $4.5bn merger
Rasheed Al Maraj, Central Bank of Bahrain governor

Bahrain Islamic Bank has ended talks with Al Salam Bank over plans to merge to create a new $4.5bn entity.

The banks “agreed to end merger talks after they were unable to reach an agreement on the exchange ratio for the shares,” according to a statement published on the Bahrain bourse.

In December, Bahrain's central bank urged five Islamic banks to merge early next year as it seeks to strengthen the banks' capital bases.

Under the plan, as well as the Al Salam Bank - Bahrain Islamic Bank merger, CAPIVEST, Elaf Bank and Capital Management House would merge with each other.

Last August, Bahrain Islamic Bank and Al Salam Bank said they were in merger talks to form the Gulf Arab state's largest Islamic lender.

"The combined entity would have total assets of BD1.7bn and shareholders' equity of BD337m. The combined entity would be the third largest domestic bank in terms of total assets and the second largest in terms of equity," a statement released at the time said.

In March, Bahrain Islamic Bank postponed a planned $143m rights issue, citing market conditions.

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