M&A WATCH- Bahrain’s Ithmaar Bank has acquired its subsidiary Faisal Investment Bank of Bahrain’s shares in Faisal Islamic Bank of Egypt, taking its holdings to 14.03%, according to an EGX filing (pdf). While the bank didn’t disclose the size of the stake or value of the acquisition, Mubasher has Ithmaar’s pre-transaction holding at 9.33%, suggesting the bank purchased a 4.8% stake in Faisal.

Background: The transaction comes as Gulf banks facing low growth in their home markets are looking for more exposure to Egypt’s fast-growing banking sector. Their targets of choice are largely the local arms of Lebanese banks, which are under pressure in their home market. Egypt’s vast unbanked population as well as the effectively unexplored potential of SME lending offer GCC banks opportunities for expansion their home markets lack. Emirates NBD and Bahrain’s Bank ABC are expected to make offers for Lebanon’s Blom bank in the coming weeks, while First Abu Dhabi Bank is reportedly in talks for the acquisition of Bank Audi.