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Iman Attia –
Fitch Ratings expects to accelerate the number of mergers and acquisitions in Islamic banks in the Gulf region, as many of them do not have the necessary position to face the competition. especially in markets suffering from the overabundance of Islamic banks such as the United Arab Emirates.
The rating agency said in a recent study that mergers would be positive for the Islamic banking sector, as they would produce larger, stronger and more efficient Islamic banks.
The search for a competitive advantage to exploit growth opportunities and create low-cost deposits favors mergers and acquisitions in the Islamic banking sector in the Gulf, he said.
Transactions generally require government support given the significant issues facing governments in most banks.
Fitch noted that most mergers and acquisitions in the Islamic banking sector take place between Islamic banks or involve a conventional bank owning an Islamic bank as a subsidiary, adding that Islamic banks can not easily acquire or merge with banks conventional.
The Islamic banking sector has been a growth sector for the past 10 years, with most Gulf states seeking to strengthen their Islamic financing capabilities and establish local Islamic finance centers.
Access to Islamic products and sukuk has grown rapidly thanks to product innovation.
However, some new banks are struggling to find good growth opportunities and to attract stable deposits, given the strength of competition. These banks have also prevented conventional banks in some countries from offering Islamic financing and access to Islamic deposits, Fitch said.
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