Bahraini lender BBK will pursue acquisition opportunities in Bahrain and the Gulf region after a planned merger with Islamic rival Shamil Bank was put on hold, its chief executive said.

"We will continue to look into opportunities, if something comes across our way, we will pursue it very aggressively," chief executive Abdulkarim Bucheery told Reuters.

Bahrain-based Islamic lender Ithmaar said last week it put on hold the planned merger of its fully-owned unit Shamil Bank and BBK, in which it owns 25 percent, due to market uncertainty.

The move marked a setback for hopes that the global financial crisis could spur consolidation in the Gulf region's fragmented financial industry.

Bucheery said BBK's balance sheet leaves enough room for financing acquisitions with equity, as its capital adequacy ratio stands at 20 percent, above the 12 percent required by Bahrain's central bank.

He said BBK would also be prepared to raise additional debt to finance larger acquisitions, declining to provide details.

Bucheery said BBK is looking for opportunities across all business lines. "At the moment we're are looking for an opportunity to join hands on the credit card business with some other organization outside Bahrain," he said.

BBK fully owns CrediMax, a Bahraini credit card services provider.

Bucheery said he regretted the decision of Ithmaar to put the proposed merger on hold. "I was disappointed of course, because we thought that it was a good business proposition to merge the two entities," he said.

"Especially since we do not have any Islamic commercial banking activities, we thought that would add value to BBK," he added.

Bucheery said having both conventional and Islamic commercial banking operations would have improved BBK's access to the banking market in Bahrain, a regional banking centre.

Islamic banks cater to investors that want to avoid paying or earning interest, viewed as usury under Islamic law. BBK recently created its fully-owned Islamic investment bank Capinnova.

BBK has a market capitalization of about $1.04 billion and a market share of 15-20 percent in the Bahraini retail market, according to its own estimates. - Reuters