DUBAI — Investment Dar, the controlling shareholder in British luxury car maker Aston Martin, on Sunday agreed to sell its stake in a loss-making Bahraini bank for $92m as the Kuwaiti firm restructures debt.
Investment Dar accepted an offer from National Bank of Bahrain and a state-run Social Insurance Organisation Asset Management, a unit of pension fund Social Insurance Organisation, to sell its 51.6% stake, or 484-million shares, in Bahrain Islamic Bank at 72 fils apiece, according to statements posted on the Bahrain Bourse.
National Bank of Bahrain and Social Insurance will hold 25.8% each after obtaining regulatory approvals.
Investment Dar, which defaulted on a $100m Islamic bond in 2009, restructured debt of about $5bn in 2011 after the global financial crisis crimped the ability of Kuwaiti companies to meet financial obligations. The restructuring is being implemented under Kuwait’s Financial Stability Law, enacted by the state in April 2009 to bolster financial institutions hurt by the credit crisis.
Investment Dar was part of the group that bought Aston Martin, the maker of luxury sports cars featured in James Bond movies, for £503m in 2007. Aston Martin said in December it would sell a 37.5% stake to Investindustrial, giving the company the cash to invest in automotive resources to compete with Volkswagen’s Bentley and Fiat’s Ferrari.
The Kuwaiti firm’s decision to sell its stake in Bahrain Islamic Bank comes as lenders in the Persian Gulf country, the home to the largest number of Islamic banks in the Middle East, seek to merge and as the central bank encourages consolidation. Bahrain Islamic Bank, with 833-million dinars ($2.2bn) of assets, has posted losses for the past four years, according to data. The bank last year quit a possible merger with Al-Salam Bank.
"We have been looking for an appropriate opportunity to establish a footprint in the Islamic banking industry and Bahrain Islamic Bank represents a suitable vehicle for us," National Bank of Bahrain’s CEO Abdul Razak Hassan al-Qassim said in the statement. "Bahrain Islamic Bank’s strengths in Islamic banking and its sound retail franchise will complement our business."
Elaf Bank, Capital Management House and Capivest combined to form a lender with assets exceeding $400m in the Middle East, North Africa, Europe and Asia, the deal’s lead adviser said last month. Gulf Finance House, a Manama-based investment bank, said in January it was studying "a number of options" to merge Khaleeji Commercial Bank with other banks in Bahrain.
Central bank governor Rasheed al-Maraj said at a conference in Manama last week there were more merger talks between banks in Bahrain.
"The time for simple banks is gone," he said. "We are entering a period where there is no more room for small banks."
Mr al-Maraj said regulators would also require domestic banks to take more steps to ensure their soundness.