Three Bahrain banks to merge to form a banking major

Three leading Bahrain banks - Capivest, Elaf Bank and Capital Management House -  are merging their operations to form a banking major that would compete with larger rivals in the growing financial market.

The combination of the three Islamic banks would create a large bank with assets of over $400 million and shareholder equity of $350 million. This is the first three-way merger to take place in the Gulf nation.

The proposal has won the approval from the shareholders of the three banks in extraordinary general meetings of the banks held yesterday and will require the final approval from the Central Bank of Bahrain and the ministry of industry and commerce.

Elaf Bank vice chairman Isa Habi said, ''The aim of this merger is to establish a strong banking institution that is able to compete solidly in a changing market.''

''The merger will bring instant diversification of assets and revenues. Also, the bank will be able to capture larger projects and will enable it to diversify its capital sources,'' Habi further added.

The merger is in line with the government's efforts for consolidation in the country's banking sector, improve banks' balance sheets, and reinforce Bahrain as a regional international financial hub.