* Merger to create fourth-largest bank in Bahrain
* Share swap involves 11 Al Salam shares for each BMI share
* Latest Bahraini bank tie-up as cenbank pushes
(Adds context, share prices)
DUBAI, Sept 9 Bahrain's Al Salam Bank
has agreed to acquire fellow Bahraini lender BMI Bank, an
affiliate of Oman's Bank Muscat, through a share-swap
deal as small banks in the kingdom consolidate operations to
Islamic lender Al Salam will exchange 11 of its shares for
each BMI Bank share to create the kingdom's fourth-largest
commercial bank. The tie-up is still subject to shareholder
approval, with meetings to vote on assent due to be held in
either September or October, BMI said in a statement.
Shares in Al Salam were 5.9 percent higher at 0726 GMT in
muted trading. Bank Muscat, which owns 49 percent of BMI, was
trading 1.4 percent lower as part of a wider sell-off in Oman.
BMI Bank and Al Salam first announced in May that they were
considering a merger. The tie-up will create a bank with assets
worth 1.79 billion dinars ($4.75 billion), 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 still sees sporadic unrest.
National Bank of Bahrain and a local pension fund
said in March it would buy a 51.6 percent stake in Bahrain
Islamic Bank (BIsB), and Capivest, Elaf Bank and
Capital Management House completed a three-way merger in
BIsB had previously been a merger target for Al Salam, but
talks collapsed in February 2012 over valuation disagreements.
One other merger being considered is a tie-up between Bank
Al Khair and Khaleeji Commercial Bank. The former's
acting chief executive and head of investment banking told
Reuters in June the new entity would have assets worth between
$600 million to $1 billion.
($1 = 0.3770 Bahraini dinars)
(Reporting by David French; editing by Dinesh Nair and Tom