Central bank of Pakistan has given approval to Bahrain-based Bank Alkhair to sell its stake in Pakistan’s Burj Bank to a subsidiary of Bahrain’s Al Baraka Banking Group.
Al Baraka is considered to be one of the top Islamic bank in the Gulf region. The bank has announced an agreement with Pakistan’s central bank, which will allow them to merge their Pakistan unit with the Burj Bank.
The Al Baraka Pakistan and Burj Bank merger will lay foundation for a new institution. The estimated assets of the new institution are estimated to be more than $1.1 billion.
The Bank Alkhair, an Islamic bank, operates in Bahrain, Saudi Arabia, Dubai, Malaysia and Turkey.
When the negotiations began, an internal source said:
Al Baraka is likely to get the deal finalised. It has a greater chance of emerging as the acquirer of Burj among all contenders because both banks are struggling to meet regulatory minimum capital requirements.
Al Baraka Bank Details
Al Baraka is the sixth institution that is conducting due diligence of Burj Bank, which is a relatively small Islamic bank with 75 branches across Pakistan.
On December 31st, 2015, the capital of Al Baraka Bank’s for regulatory purposes reached Rs 8.1 billion, compared to the usual minimum capital requirement (MCR) of Rs10 billion.
However, State Bank of Pakistan did not take any strict actions and decided to grant relaxation to Al Baraka.
Following are the major stockholders of Al Baraka Bank:
- Al Baraka Islamic Bank Bahrain (66.6%).
- Mal Al Khaleej Investments (17.7%)
- Sheikh Tariq Bin Faisal Khalid Al Qassemi (11.5%).
Al Baraka saw a huge improvement in terms of net profit in 2015. The net profit increased 65 percent from 2014 and amounted to Rs. 240.4 million in 2015.