Ithmaar Bank to acquire 100% of Shamil Bank in share swap

Ithmaar Bank, which currently owns 60% of Shamil, plans to purchase all the remaining issued and fully paid-up shares through a share swap. This transaction, which would make Shamil Bank a wholly owned subsidiary of Ithmaar Bank, follows a $401m purchase in August last year of 136.97 million shares in Shamil Bank from Geneva-based Dar Al-Maal Al Islami (DMI) Trust.

That transaction gave Ithmaar Bank a controlling stake in the institution and its subsidiaries Pakistan-based Faisal Bank Limited (FBL) and Swiss-based Faysal Private Bank (FPB). This proposed share swap would make FPB, already a part of the Ithmaar banking group, wholly owned by Ithmaar Bank, while Ithmaar's effective stake in FBL would increase from 51% to 65%.

Ithmaar Bank has already approached the Central Bank of Bahrain (CBB) with this purchase plan, which requires the approval of an Extraordinary General Meeting (EGM) of both banks to be held in the near future. The dates of the EGMs will be announced later this month. This transaction requires the appointment of two independent entities to evaluate the fair value of each of the banks' shares, and the swap will take place based on the results of these evaluations.

"Our strategic acquisition of Shamil Bank is an effort to further consolidate the Ithmaar banking group, which is quickly turning into one of the most diversified and dynamic of its kind in the region. Shamil Bank's outstanding performance, most recently reflected in a 62%leap in half year net profits to $53.2m, will also add value to Ithmaar Bank's own consolidated balance sheet,"

said Khalid Abdulla-Janahi, Chairman, Ithmaar Bank.

"As well as having strong brand equity and a sizable market share in the Kingdom of Bahrain, Shamil Bank has international reach through its subsidiaries and affiliates as well as through its own investment banking activities. We believe that the two institutions complement each other perfectly and that the shareholders of both stand to gain a lot from this transaction," he added.

With a paid-up capital of $230m, Shamil Bank is the leading Islamic commercial bank in Bahrain. It operates a strong local branch and ATM network across Bahrain, complimented by a well staffed call centre and a team of direct sales agents. It has an established reputation as an innovator of Sharia-compliant financial products.

Faisal Bank Limited (FBL) is a full service banking institution offering consumer, corporate and investment banking facilities throughout Pakistan. It has a widespread and growing network of branches in the main provinces of the country and Azad Kashmir. Faysal Private Bank (FPB) has an established track record in tailoring innovative wealth management portfolios, principally in global real estate. Its business model caters to the long-term financial well-being of clients with unique wealth management needs, while staying within the boundaries of ethical principles derived from the Sharia.

The Ithmaar banking group also includes Solidarity, First Leasing Bank (FLB) and Ithmaar Development Company (IDC). This allows the group to cover the entire spectrum of Islamic banking services, including investment, commercial and private banking, private equity, mergers and acquisitions advice, takaful, equipment leasing and real estate development.