Kuwait Finance House has placed an $8.8bn offer to acquire Bahrain’s Ahli United Bank (AUB) through a share swap deal.

According to a Bloomberg report, the Kuwaiti lender has approved a plan to issue one share against 2.325581 shares of Ahli United.

The exchange ratio was approved following an advisers report confirming the same swap ratio.

Reports that Kuwait Finance House may offer around 35% premium to acquire AUB first emerged in January this year.

The deal is subject to shareholder approvals of both the banks, apart from regulatory consents in both countries.

If materialises, the deal will create one of the largest lenders in the Gulf region with $100bn in assets.

Arqaam Capital research head Jaap Meijer told Bloomberg that the merger ‘will create substantial cost synergies in Bahrain and Kuwait’.

It will boost KFH earnings and offer better growth prospects, the analyst told the publication.

In the recent years, fluctuating oil prices have forced the Gulf-based lenders to look for mergers to scale up business.

In May this year, three the UAE-based lenders Abu Dhabi Commercial Bank, Union National Bank and Al Hilal Bank completed their merger. It created the third largest lender in the UAE with around $115bn in assets.

Saudi Arabian lender National Commercial Bank (NCB) is also started process to merge operations with domestic peer Riyad Bank.