The Bahrain Islamic investment group GFH said on Monday it had signed a preliminary memorandum of understanding for a potential acquisition of a majority stake in the struggling Bahraini Islamic institution Bank Al Khair (BAK) for an undisclosed sum.
GFH, which is listed in Dubai and Manama, gave no details regarding the size of the BAK shareholding under discussion, or when a deal between the entities is likely to be completed.
Discussions are believed to be at an early stage, with due diligence and the acquisition structure yet to be finalised. Approvals from shareholders, directors and the regulator are still outstanding.
“GFH believes that the acquisition of BAK will create a larger financial group having banking operations within GCC, UK, Malaysia, Turkey, Pakistan and India,” it said in a statement on the Dubai stock market. “The acquisition is expected to impact favourably on shareholders of the combined entity.”
Founded in 2004, BAK said in its second-quarter results that its capital adequacy ratio at the end of June was “below the minimum regulatory capital requirements”, and that its current contractual liabilities exceeded its liquid assets, raising questions about its ability to continue as a going concern.
The bank posted a loss of US$10.4 million for the second quarter, a 60 per cent increase compared with the same period last year.
GFH shares closed 0.44 per cent lower at 89.5 fils in Dubai on Monday. Its shares have gained 82.3 per cent since the start of the year.
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