The merger of Capivest, Elaf Bank and Capital Management House is intended to create a single, more robust entity than its component banks, which is seen as being better able to compete with its larger rivals in the market.
The vote to approve the merger took place last week at separate shareholder meetings.
The combined bank would have assets of more than $400m, with shareholder equity of $350m, published reports said.
If it goes through – and the plan is contingent on the approval of the Central Bank of Bahrain and the Ministry of Industry and Commerce, according to a statement announcing the news of the shareholders’ approval – it would be the first such three-way merger to take place in Bahrain.
Noting that the merger would create a single, “strong banking institution that is able to compete solidly in a changing market”, Isa Habib, vice chairman of Elaf Bank, added, in the statement: "The merger will bring instant diversification of assets and revenues.
"Also, the bank will be able to capture larger projects and will enable it to diversify its capital sources."
Bank mergers in the Gulf are said to be rare because the shareholders are typically members of powerful families that struggle to yield control, and charge above-market rates.
Bahrain is one of the Gulf’s longest-established financial services centres, but has been struggling to maintain its position relative to other centres in the region and elsewhere since last year’s Arab Spring demonstrations, which have tarnished its image.
The March edition of the Global Financial Centres Index ranked Bahrain 57th out of 77 centres, down from 55th place in the previous ranking published six months earlier, and 43rd place in September 2008. By comparison, Dubai, considered by the GFCI researchers to be the top Middle East/African financial centre at the moment, was ranked 29th in March, up from 36th place in September 2011 and 23rd in September 2008.
