Kuwait Finance House is planning to offer nearly 35% premium to acquire Bahrain’s Ahli United Bank (AUB) through a share swap deal, Bloomberg has reported.

The Kuwait-based lender is expected to offer one share for every 2.1 in Ahli United Bank, the publication reported citing unnamed sources with the development.

Based on the potential share-swap ratio, the deal is expected to value around $8bn.

However, the sources also told Bloomberg that AUB is yet to accept the offer and may even decline it.

If successful, the merger will create one of the largest lenders in the Gulf region with nearly $92bn in assets.

Following the reports of the premium offer, Kuwait Finance House shares fell by 1.1% while AUB shares soared by 1.3%.

Both the entities started renewed discussions to merge the banking operations last year, after previous negotiations failed over fluctuating prices.

Currently, many leading lenders of the Middle Eastern region have started exploring mergers to consolidate their operations amidst teetering oil market. Deteriorating asset qualities, decelerating deposits and credit growth are also major contributing factors.

Recently, Saudi Arabian lender National Commercial Bank (NCB) started initial discussions for a merger with domestic peer Riyad Bank.

The deal will create a combine entity with $182bn in assets.

Abu Dhabi Commercial Bank, Union National Bank and Al Hilal Bank in the UAE are also in talks to merge their operations.