Dubai government will hand control of Dubai Bank to Emirates NBD, just four months after the troubled Islamic lender was bailed out by the Gulf state following loan losses.
The takeover is a “practical translation of Dubai government’s commitment to strengthening the banking sector,” Emirates NBD chairman Sheikh Ahmed bin Saeed Al Maktoum said in a statement issued by Dubai government’s media office on Tuesday.
“[It will] reflect positively on the performance of UAE banking in general in the coming period.”
The takeover was ordered by the ruler of Dubai, it said.
Dubai said in May it would inject an unspecified amount of capital into Dubai Bank in a move aimed at protecting depositors' interests and avoiding a default. The lender is wholly-owned by Dubai Banking Group, which itself is 70 percent-owned by state-backed Dubai Holding.
Options for the lender included being run on a stand-alone basis or merged with another state-owned bank, the government said at the time.
“The takeover aims at empowering financial institutions to serve the national economy and to consolidate the country’s position as a leading international financial hub,” the media office said.
No financial details of the Emirates NBD take over were disclosed.
In late June, Dubai's ruler named his uncle and close adviser Sheikh Ahmed bin Saeed al-Maktoum as chairman of Emirates NBD, the UAE's largest bank by assets, replacing Ahmed Humaid Al Tayer, a prominent Dubai business and political figure.
Sheikh Ahmed also took charge of debt-laden conglomerate Dubai World as chairman in December.
Emirates NBD in July saw second-quarter net profit surge 87 percent to AED744m, helped by a drop in loan loss provisions and improved income from investment securities.