IslamicFinance.de

The merger of National Bank of Abu Dhabi (NBAD) and First Gulf Bank (FGB) in the UAE last year had triggered a number of unconfirmed reports of bank mergers across the GCC. However, most of these reports were denied by bank managements. While bankers and analysts say the time is ripe for more bank mergers, they expect more merger deals to happen in the Islamic banking and Takaful industry. A proposed merger of Kuwait Finance House and Ahli United Bank is expected to result in second biggest Islamic Bank in the GCC after Al Rajhi Bank. The merger of Qatari banks Masraf Al Rayan, Barwa Bank and International Bank of Qatar is progressing and is expected to complete by end of the year. Some countries have only a small number of local banks, which limits competition. This means that profitability has remained solid and is therefore less likely to be a driver for M&A. Another stumbling block is the ownership structure of GCC banks, well established local private shareholders often control sizeable stakes and foreign banks only hold minority stakes.