EBI, NBD reveal merger details

The merger of Emirates Bank International (EBI) and National Bank of Dubai (NBD) is likely to create synergies worth almost $100 million, the banks said today.

At a press conference to announce details of the merger, the banks said $41 million of the synergies would come from cost savings, including $14.2 million from retail branch and ATM network consolidation.

The merged bank, to be called Emirates NBD, is expected to save another $10.3 million on its IT operations when it reallocates personnel from NBD to EBI’s dedicated IT centre.

There could also be $53.1 million in revenue synergies created from cross-selling opportunities and an increased capacity for cross-border risk, the banks said.

Emirates Bank chairman HE Ahmed Al-Tayer again stated there were unlikely to be job cuts, since the merged bank was looking to expand.

“We are going to expand and utilise all our resources. I think we need all of those HR resources to support this merger,” Al-Tayer said.

The Emirates Bank chairman will become chairman of Emirates NBD, with Emirates Bank chief executive Rick Pudner as its CEO. NBD's chairman Abdullah Mohamed Saleh will be vice chairman of the new entity.

The merger of EBI and NBD, which first attempted a merger in 1999, will create Gulf's largest bank by assets with a combined market value of $11.3 billion.

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

It will be the fifth largest GCC bank by market capitalisation, behind Al Rajhi, Samba, National Bank of Kuwait and Kuwait Finance House.

Each EBI share will be exchanged for one share in the new company, while each NBD share will be exchanged for 0.95 shares in Emirates NBD.

This values NBD shares at AED8.84, a premium of 14% on the share price on the day prior to the announcement of the merger.

Shareholders of both banks still need to approve the offer, but it has been approved by the boards of both banks and the Government of Dubai, as a shareholder in both banks, has confirmed its intention to accept the offer.

The banks said in March they would merge at the behest of HH Sheikh Mohammed Bin Rashid Al Maktoum, UAE Vice President, Prime Minister and Ruler of Dubai, to form a bank large enough to meet the demands of a rapidly growing economy, and they appointed Goldman Sachs Group to advise them on the deal.

Trading in both banks’ shares was suspended on July 2, and a request has been made for trading to resume on July 15.

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