DUBAI: Shareholders in Bahrain's Al Salam Bank have approved a plan to raise the bank's capital by 100 million dinars or $265 million by issuing new shares as part of a merger with fellow Bahraini lender BMI Bank, Al Salam said on Wednesday.
Shareholders also approved the acquisition of all of BMI's 58.5 million shares through a share swap in exchange for 643.8 million shares in Al Salam, it added.
The new shares would be offered to BMI shareholders at a rate of 11 for each BMI share to create the kingdom's fourth-largest commercial bank.
Al Salam agreed last month to acquire BMI Bank, an affiliate of Oman's Bank Muscat, as small banks in Bahrain consolidate to remain competitive.
BMI and Al Salam first announced in May that they were considering a merger. The tie-up would create a bank with assets worth 1.79 billion dinars, according to second-quarter results from both institutions.
It would be the third merger in the Bahraini banking sector this year, and comes as the Gulf state tries to encourage consolidation among smaller Islamic banks hit hard by a local real estate crisis and an Arab spring-inspired political uprising, which is still evident in sporadic unrest. (Reuters)