Bahrain-listed financial services firm United Gulf Holding (UGH) has obtained the nod of the Central Bank of Iraq (CBI) to acquire an interest in Bank of Baghdad (BOB).
The deal is expected to increase UGH’s balance sheet size by $1bn.
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In a bourse statement, UGH said that it will acquire a 51.8% stake in Bank of Baghdad. UGH expects the deal to add to its profits going forward.
“In UGH’s books, the medium-term debt will increase by USD 55 million which was acquired to fund the acquisition,” the statement added.
The transaction is anticipated to be wrapped up by the end of March this year.
Burgan Bank signed an agreement to divest its majority stake in BOB to its sister company UGH earlier this month.
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By GlobalDataThe aim is to cut non-performing loans as well as exit riskier assets.
Burgan Bank expects a one-off negative impact of over $29.6m on last year’s net income of which over $13.1m is expected to be reversed upon deal closure.
In recent years, the Gulf region has witnessed several bank mergers amidst sluggish economic conditions.
Recently, First Abu Dhabi Bank (FAB) confirmed that it is in talks to acquire Bank Audi Egypt.
Besides, Dubai Islamic Bank (DIB) snapped up competitor Noor Bank to create one of the largest banks in the UAE with over $75bn in assets.
