Fitch said in a recent report that mergers and attainments among Islamic banks will increase in the GCC region, where many banks still lack the market position to compete with their large peers, especially in markets where there is an inflated number of banks.
According to Fitch, the unification will ultimately be positive for the Islamic banking sector through the creation of larger, stronger and more efficient entities. The mergers and acquisitions of Islamic banking services in the GCC revolve around looking for a competitive advantage to enhance growth opportunities, build low cost deposits, and reduce the operational costs.
Islamic banking has grown over the past 10 years, as most GCC countries are trying to build their financing capabilities and establish local Islamic finance centers. Access to Islamic finance instruments and sukuk has also grown as more Sharia-compliant products are created.
In the UAE, Dubai Islamic Bank is likely to merge with Noor Bank, creating a more sophisticated key player benefiting from product and business development.
Source (Al-Khaleej newspaper, Edited)
