Kuwait Finance House K.S.C.P. is in talks to acquire Bahrain-based Ahli United Bank B.S.C. and its operations in Kuwait, Bloomberg News reported, citing "a person familiar with the matter."

A deal would pave the way for the creation of one of the Middle East's largest Islamic banks with roughly $85 billion of assets, according to the May 29 report. Kuwait Finance House's assets were $53.9 billion at March-end, while Ahli United Bank had approximately $31.5 billion, according to data compiled by the newswire.

Kuwait Finance House was previously reported to have engaged in informal talks to acquire Ahli United Bank's Kuwait-based unit, Ahli United Bank K.S.C.P.

The news comes as bank consolidation among Gulf lenders gains steam amid the sustained period of low oil prices.