There is a major need for consolidation in Bahrain's retail banking sector if it is to compete in regional markets.

That was the message from Bahrain Association of Banks (BAB) chairman Abdul Razak Al Qassim.

Speaking at the BAB's quarterly Press briefing, he said that while the presence of large number of small banks in Bahrain was good for competition, there was still a need for consolidation in the sector to face major challenges, reported the Gulf Daily News, our sister publication.

He said that Bahrain's two largest local banks - BBK and NBB - were only in the top 40 to 50 in terms of size in the region, even if they merged they would still only create an entity that was on the top 25 to 30 entities.

"Consolidation of the retail banking sector in Bahrain is an important issue for us to move forward and that is an issue that has to be addressed and one that has been emphasised by the governor of the Central Bank of Bahrain on a number of occasions," he said.

"There is a definite need to speed up consolidation in this sector. The banking industry is still growing, and with stable oil prices, we will see further growth but to compete regionally we need consolidation.

"Small banks in Bahrain have been doing well but to have the ability to compete regionally is a problem," he said.

"The banking industry has reached a stage where to be effective we need scale and that is doable and is a must.

"Once you are bigger you can attract bigger asset and you need that to compete with largest regional institutions. "The majority of investment projects in the region are large infrastructure projects and in order to compete in that financing and be a player you need scale," he added.-TradeArabia News Service