Al Salam mulls bid for rival Bahrain Saudi Bank

Bahrain's Al Salam Bank is considering a share offer for smaller rival Bahrain Saudi Bank, Al Salam said yesterday, after write-downs on investments drove Bahrain Saudi Bank into the red in 2008.

Al Salam, an Islamic lender, said it was exploring the possibility of issuing shares to Bahrain Saudi shareholders with a view to combining their operations.

"Consolidation in the Bahrain banking sector is inevitable and as a larger financial institution, the combined entity will be more competitive in the marketplace," the statement said.

The combined bank would figure small on the Gulf financial landscape with a combined market value of $439 million (Dh1.6 billion), according to Reuters data. Al Salam has a market value of $306m and Bahrain Saudi a value of $133m.

Al Salam posted a 2008 profit of BHD25.5 million (Dh248m), in contrast to Bahrain Saudi, which posted a net loss of BHD5.8m for 2008 due in part to write-downs on asset values.

Al Salam began operations in 2006 and is active in retail banking, wealth management and project finance, according to the bank's website. Bahrain Saudi, established in 1983, offers retail and corporate services to small- and medium-sized customers.

Islamic banks cater to investors who want to avoid earning or paying interest, viewed as usury under Islamic law.

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