DUBAI, March 24 Bahrain's Khaleeji Commercial
Bank and unlisted Bank Al Khair have dropped their
plan to merge after failing to agree on terms, Khaleeji said in
a bourse statement on Monday.
"The primary reason for this decision is due to the
non-agreement on the structure and the valuation of the deal,"
The two lenders had been in talks since June last year. The
decision to call off the merger was mutual and the two banks
will continue to maintain a close business relationship,
Khaleeji said without elaborating.
Bahrain's central bank has been encouraging local banks to
merge to strengthen them after a real estate crash and the
island kingdom's political unrest in 2011.
National Bank of Bahrain and a local pension fund
bought a 51.6 percent stake in Bahrain Islamic Bank in
March 2013, while a share-swap agreement between Al Salam Bank
and BMI Bank was completed last month to create the
kingdom's fourth-largest commercial lender.
Mergers in the Gulf banking sector are rare as powerful
local shareholders are often unwilling to give up controlling
positions except for vastly inflated valuations.
(Reporting by Olzhas Auyezov; Editing by Andrew Torchia)