Analysts see merger as trendsetter

DUBAI — Banking analysts in the UAE, welcoming the landmark merger move between Emirates Bank International and National Bank of Dubai, said it would be trendsetter as they expect more banks to follow suit.

By Deputy Business Editor (BY ISSAC JOHN)

Published: Fri 13 Jul 2007, 10:00 AM

Last updated: Sat 4 Apr 2015, 10:20 PM

Shaikh Sultan bin Saud Al Qasimi, Chairman of Capital Industries and Investments (CII), a private equity investment firm, welcoming the EBI-NBD merger move, said he hoped more banks in the UAE would "by their own conviction" follow the example. However, he warned that after the merger, the spare banking licence should not be used to set up one more small banking entity. "Small UAE banks should opt for merger by their own will or increase their minimum capital." He also felt that a large bank like National Bank of Abu Dhabi should remain as it is while small banks should not hesitate to combine their resources to become more competitive.

Shehab Gargash, CEO of Daman Investments, said the NBD-EBI merger will impact the banking sector but will have little impact on the stock market as the merged entity would have only a small public share float.

T. K. Raman, Chief Operating Officer of Finance House, said the proposed merger is an ideal marriage between two banks, one with a core strength in retail banking and the other in the corporate sector. "As the GCC banking sector is opening up for increased competition, the UAE needs bigger banks, like those in Saudi Arabia, which can compete with other regional banks on an equal footing." Raman said some UAE local banks definitely needed to upscale their balance-sheet size to cope with the market requirements for huge project financing. "The investment needed for some of the mega projects which are being launched in the country are bigger than the balance sheets of some local banks. You really need to have local banks big enough to finance such mega projects."

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