Mergers and acquisitions (M&A) in Islamic banks in the GCC are expected to continue in 2020 as Sharia-compliant lenders look to carve out market share in an increasingly competitive environment, a senior executive of Fitch Ratings said.
“We’ve seen the trend of GCC Islamic banks M&A in 2019 and we expect that to continue next year,” Bashar Al Natoor, global head of Islamic finance at Fitch Ratings, told The National in an exclusive interview.
“Islamic banks are searching for market position. Secondly, they are looking for growth opportunities to cement their positions and third, you have overbanking in some countries and the consolidation is something that is happening in these countries – to have a number of financial institutions at the lower level than it is currently.”
The comments come as a number of sharia-compliant lenders in the Gulf hold talks to combine their operations to boost revenues.
Dubai Islamic Bank, the biggest Sharia-compliant lender in the UAE, is in the process of taking over its smaller rival Noor Bank, while National Commercial Bank in Saudi Arabia is pursuing a merger with its competitor, Riyad Bank.
National Bank of Bahrain, a majority government-owned lender, last month firmed up its bid for Bahrain Islamic Bank. It is looking to acquire at least 40 per cent of BIB in a deal which values it at 124 million Bahraini dinars (Dh1.41bn)
.—(Courtesy: The National)