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 on today (Tuesday).
The new entity would have a market value of $12.03 billion at Tuesday's closing prices and control 165 billion dirhams ($44.96 billion) in assets, overtaking the country's largest lender, National Bank of Abu Dhabi, on both counts.
Neither bank had said it was in talks on a merger and the stock exchange said it was unaware of the deal, first announced by the official news agency WAM.
The UAE Central Bank also said it was unaware of the deal when contacted on Tuesday.
Four sources confirmed the WAM report which said the deal was agreed with the blessing of the emirate's ruler, Sheikh Mohammed bin Rashid al-Maktoum "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.
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 percent of National Bank of Dubai, the emirate's fourth largest lender by market value, and about 77 percent 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.For all the latest banking and finance news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
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