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NBAD mulls merger on Dubai banks' lead

National Bank of Abu Dhabi (NBAD) is considering mergers more closely after two Dubai banks said they would merge to create the UAE's largest lender, NBAD's chief executive said.

Emirates Bank International and National Bank of Dubai said last week they would merge at the behest of Dubai's ruler to create a lender with $45 billion in assets.
"Clearly, we need to get bigger by acquisition or grow organically to compete effectively in the market place. The EBI-NBD merger only accelerates the need for us to consider mergers to get those economies of scale," Michael Tomalin told Reuters in a telephone interview on Thursday.

He declined to comment when asked if NBAD, currently the UAE's largest bank by market value and assets, was in talks about a merger or acquisition.

The merger of the two Dubai banks was designed in part to prepare the UAE banking sector for competition, with the UAE negotiating trade deals with the United States and the European Union, analysts including Wadah al-Taha, head of strategy at Emaar Financial Services, said last week.

Consolidation in the UAE banking sector will become necessary as regional and global free trade agreements and a Gulf Arab monetary union, planned for 2010, give foreign banks more access to the domestic market, Tomalin said.

"There is more pressure on banks to get bigger today and banks have two strategic choices, either be very small niche players ... or be a large, universal bank in many markets with many products," he said.

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