The troubled Dubai Bank may merge with the Emirates Islamic Bank (EIB) following its acquisition by Emirates NBD, a newspaper reported on Sunday.
A committee comprising senior representatives from Emirates NBD, Dubai Bank and EIB found that the merger is possible given EIB’s sophisticated systems which allow it to fully absorb Dubai Bank’s operations, Alkhaleej said.
In an unsourced report, the Sharjah-based Arabic language daily said the merger would cut costs for both banks, adding that the committee decided it would not be feasible for Dubai Bank to remain a separate entity because of business downturn in the country and the surge in Shariah-complaint bank services.
“The committee may take between four and six months to come out with the best solution for the group….a source close to the committee said several options are available, including merger of Dubai Bank and EIB,” the paper said.
Emirates NBD Bank, the largest lender in Gulf, took over Dubai Bank in October on orders of HH Sheikh Mohammed bin Rashid Al Maktoum, UAE Vice President and Prime Minister, Ruler of Dubai.
A statement said the acquisition was in line with Dubai government efforts to enhance the banking sector in the Emirate.
Dubai Bank was acquired in May by the government of Dubai, which pledged to inject capital into the troubled lender. At the time, the government said the takeover would ensure that Dubai Bank’s business continues uninterrupted.
Dubai Bank posted a net loss of Dh 290.6 million in 2009, the last financial results to be made public.
Before the takeover, Dubai Bank was jointly owned by Dubai Holding, with a 70 percent stake, and Emaar, Dubai’s main property corporation, with 30 percent.