Kuwait Finance House (KFH) said that there were no new developments regarding its acquisition of Bahrain’s Ahli United Bank after reports claimed that the government requested a study into the feasibility of the deal. The bank had earlier said it had suspended the acquisition process of Bahrain’s Ahli United Bank until December due to the difficulty in finalising the transaction during the coronavirus outbreak. The boards of directors and general assemblies of both banks have approved the entire acquisition due diligence reports and feasibility studies, KFH said in a statement to Boursa Kuwait, where its shares trade. However, a recent report on Kuwait's official news agency Kuna indicated that the country's ministry of finance has tasked KFH's biggest single shareholder, the Kuwait Investment Authority, to look into the merger's feasibility as the pandemic affects the investment climate. Earlier this month, KFH said it will postpone the merger deal due to “the prevailing unprecedented circumstances relating to the Covid-19 pandemic". It also obtained permission from the Central Bank of Bahrain to postpone the process. The global economy is set to contract 3 per cent this year and slide into the deepest recession since the Great Depression of the 1930s as restrictions put in place to stop the spread of the pandemic dent activity, according to the International Monetary Fund. Kuwait and Bahrain imposed travel restrictions and put other measures to contain the spread of the virus. Last year, the boards of KFH and Ahli United Bank agreed on a share swap ratio to create a combined Islamic banking entity with $96.7 billion (Dh355bn) in assets. The merger, once completed, is likely to create the world's largest Islamic bank, surpassing Saudi Arabia-based Al Rajhi Bank, Moody’s Investors Service said in a recent report. KFH's bid to acquire Ahli United Bank comes as consolidation gains pace among Islamic lenders in the region. Earlier this year, Dubai Islamic Bank completed its acquisition of smaller rival Noor Bank, creating an entity with assets of more than Dh275bn. Oman Arab Bank is also set to proceed with its merger with Alizz Islamic Bank after securing regulatory approval for the deal from the Central Bank of Oman. Oman Arab Bank, a subsidiary of Oman International Development and Investment Company, Ominvest, agreed a share swap deal with Alizz bank directors in January. The deal will give OAB a stake of about 81 per cent in the merged entity.