Green light for $11.25bn UAE bank

Emirates Bank International and National Bank of Dubai said on Monday they had agreed a merger deal to create the Gulf's largest bank by assets and asked the bourse to halt trading in their shares.

The banks would have a combined capitalisation of $11.25 billion at Sunday's closing prices, topping that of National Bank of Abu Dhabi, the largest bank by market value in the United Arab Emirates.

The stocks would remain suspended until the two lenders announced details of the deal after consulting regulators, the Dubai stock market chief said. The process could take 15 days, a spokesman for the banks said.

The two lenders said in March they would merge at the behest of Dubai's ruler to form a bank large enough to meet the demands of a rapidly growing economy and appointed Goldman Sachs Group to advise them on the deal.

The government of Dubai, part of the United Arab Emirates federation, owns 76% of Emirates Bank and 14% of National Bank.

"Both boards are going to go back to their shareholders and discuss with them the conditions," said Essa Kazim, chairman of the Dubai Financial Market. "The shares will be suspended until all that information becomes public."

Majority shareholders of National Bank, Dubai's fourth-largest by market value, would have little choice but to acquiesce to a deal blessed by the emirate's ruler, Standard & Poors' credit analyst Anouar Hassoune said when the merger was announced in March.

The banks had assets worth $48.7 billion at the end of the first quarter, allowing the new entity to surpass Saudi Arabia's National Commercial Bank as Gulf's largest lender by assets.

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