EIB seeks to acquire Dubai Bank: report

Dubai Bank and Emirates Islamic Bank are holding merger talks in order to create a huge Shariah-compliant bank in the emirate, sources said. (FILE)

Emirates Islamic Bank (EIB), one of the largest shariah-compliant lenders in the region, is locked in negotiations to acquire Dubai Bank, a unit of the giant government-controlled Dubai Banking Group (DBG), a local daily said Sunday.

Quoting “acquainted” banking sources, the semi official Alittihad newspaper said the move is intended to create a “massive Islamic banking unit” capable of competing with other banks and coping with new economic developments.

“This move comes within the new economic vision of the Government of Dubai, aimed at merging small and medium banking units into major institutions capable of competing with other banks,” the paper reported, quoting banking sources, who it said had participated in a meeting about the proposed acquisition.

The sources told the newspaper that the idea had been prompted by the success of the merger between Emirates Bank International (EBI) and the National Bank of Dubai (NBD) into what is known now as Emirates NBD.

They said the negotiations between the two banks began during last Ramadan, adding that another meeting three days ago covered various scenarios.

“The current negotiations are aimed at either merging the two banks or acquisition by the larger bank (EIB) of the smaller bank (Dubai Bank),” it said.

EIB, 99.8 per cent controlled by EBI, controlled assets of around Dh25.3 billion at the end of March. Its shareholders equity stood at nearly Dh2.84 billion and net profits for the first quarter at around Dh63 million.

Dubai’s Government holds around 29.8 per cent of Dubai Bank, which has an authorized capital of nearly Dh3.4 billion. It is controlled by the Dubai Banking Group, an affiliate of the government-owned Dubai Holding.

“One of the proposals after the completion of the merger process includes the purchase of Amlak Company by the newly created bank since it is involved in Islamic financing,” the newspaper said.

It quoted the sources as saying that ENBD leadership is keen to push ahead with the merger or acquisition operation, adding that it is involved in the negotiations.

“The sources declined to disclose the date of the expected acquisition or merger on the grounds the negotiations are still in the initial stages, adding that EIB has presented conditions that will require lengthy sessions,” it said.