Saudi Investment Bank said on Wednesday it agreed to buy 50% of Albaraka Banking Group from Dallah Albaraka Group in a share swap deal. Saudi-based Dallah Albaraka Group will take shares in Saudi Investment Bank in return for the stake in Albaraka Banking, Saudi Investment said in a statement.
Dallah and its president, Sheikh Saleh Abdullah Kamel, together own a 55% of Albaraka Banking, an Albaraka spokesman said.
“This transaction is an important step towards achieving geographic, regional, Arab and Islamic expansion and integration,” said Saudi Investment Bank, the kingdom’s third-worst performing stock in 2007.
Albaraka Banking, which complies with Islamic principles such as banning the receipt of interest, has 230 branches in 10 countries, including Turkey, Pakistan and South Africa, according to its Web site.
It also has licences to open branches in Syria and Indonesia, the world’s most populous Muslim nation.
Shares of Albaraka Banking Group have risen 5.7% this year.
“Dallah Albaraka Group will take shares in Saudi Investment Bank for the price that the two parties will agree upon after the end of necessary procedures,” Saudi Investment said.
Last week, Albaraka Banking Chief Executive Adnan Yousif told Reuters he planned to open about 74 branches during the next five years, all but two of them outside Bahrain.
The agreement with Dallah “provides a competitive advantage to Saudi Investment Bank since it will achieve diversified sources of income and banking services to cater for the rapidly growing needs in the banking sector,” Saudi Investment said.
A spokesman for Albaraka Banking could not immediately be reached for comment.
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