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Emirates Bank International, NBD to merge

DUBAI — Emirates Bank International and National Bank of Dubai have agreed a surprise merger to create the largest United Arab Emirates lender, sources at the two banks said yesterday.

The new entity would have a market value of $12.03 billion at yesterday's closing prices and control Dh165 billion ($44.96 billion) in assets, overtaking the country's largest lender, National Bank of Abu Dhabi, on both counts.

Emirates Bank Chairman Ahmed Al Tayer will be the Chairman of the merged bank, while Abdulla Saleh, Chairman of the National Bank of Dubai, will be the Vice-Chairman of the new bank.

Four sources confirmed the Wam report which said the deal was agreed with the blessing of His Highness Shaikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, "at the wish of the banks to create a strong banking body."

"It appears to be a decision from the Ruler," one of the sources said.

Meanwhile, an Emirates Bank executive said, the planned merger of Emirates Bank International and National Bank of Dubai is the result of a Dubai government decision.

"The whole thing is a realisation from the Dubai government that there is a need for a strong bank that will participate in developing the economy," Sulaiman Al Mazroui, Emirates Bank's Chief Manager of Group Affairs, told the news agency.

"This was a decision by the Government of Dubai."

The two banks are still working out terms of the deal, he said. "There is a process to align the value of the shares of the two banks," he said. Earlier, spokesmen for both banks and for the United Arab Emirates central bank declined comment.

Essa Kazim, chief executive of the Dubai Stock Exchange, said he was unaware of the deal.

The Dubai government owns around 14 per cent of National Bank of Dubai, the emirate's fourth largest lender by market value, and about 77 per cent of Emirates Bank, the biggest lender in Dubai.

The merger is likely to be part of efforts to prepare the banking sector for competition, with the UAE negotiating trade deals with the United States and the European Union, said Wadah Al Taha, head of strategy at Emaar Financial Services.

"The UAE needs to create bigger bodies as they open to international trade. Banks are currently too small to face the competition," he said.