Kuwait Finance House KSCP is considering buying Ahli United Bank BSC’s Kuwaiti operations as it seeks to expand in the Persian Gulf state, according to people familiar with the matter.
KFH, as the lender is known, is working with a financial adviser on the talks, the people said, asking not to be identified because the information is private. Discussions between the two banks are informal and Bahrain’s Ahli United isn’t running a formal sale process, the people said. There is no guarantee that a deal will take place and final agreements haven’t been reached with any of the parties, they said.
Lower oil prices are forcing Gulf lenders to consolidate for scale and to better compete in a crowded market. Abu Dhabi lenders National Bank of Abu Dhabi PJSC and First Gulf Bank PJSC recently merged to create a regional powerhouse with $175 billion of assets. Qatar’s Masraf Al Rayan QSC is planning to combine with unlisted Barwa Bank QSC and International Bank of Qatar QSC in a three-way merger to create the country’s largest Islamic lender.
Ahli United declined to comment. A KFH spokesman said the chairman and group chief executive officer have on numerous occasions responded to queries on the topic of expansion plans and the bank has nothing further to add. In November, KFH denied reports that it was going to merge with Ahli United Bank.
Ahli United owns 67 percent of Kuwait-based Ahli United Bank KSCP, which had 3.7 billion dinars ($12.2 billion) in assets at the end of last year, according to its website. Shares in the Kuwaiti unit have gained 8 percent this year, giving it a market value of 767 million dinars. KFH has assets of 16.4 billion dinars and a market value of 2.94 billion dinars.
Shares of Bahrain’s Ahli United Bank BSC, which are cross-listed in Kuwait, rose as much as 2.9 percent before paring gains to 1 percent on Thursday. About 12 million shares traded, almost six times its 30-day average. Shares of KFH fell 2 percent to 0.500 dinar.