'Market does not need new banks'

Emirates NBD Chairman Ahmed Humaid Al Tayer said he hopes the UAE Central Bank will stop issuing new banking licences until there is a real need in the market.

And he expressed concern over the granting of three licences for Islamic banks in one year. "Current developments in the banking sector require more mergers and acquisitions to create giant financial institutions instead of the granting of licences for small banks," he said.

"The increasing number of small banks will not support the high economic growth. I hope the Central Bank will stop granting new licences."

The remarks came after a number of observers suggested the UAE is overbanked. Al Tayer said Emirates NBD achieved up to 45 per cent profits growth during the first half of 2008 compared to the same period last year.

"The growth in the UAE banking sector's profits during the first half of the year ranged between 30 and 45 per cent compared to the first half in 2007," he added.

"Growth in Emirates NBD's profits was at the upper side of this range. I expect the range will be the same for the total profits of the banking sector this year."

Al Tayer said the bank was pressing ahead with the process of integrating Emirates Bank International (EBI) and the National Bank of Dubai (NBD) and a unified brand for the merged business will be launched soon.

Jan Hendrik Kraus, General Manager of Integration, said: "We have achieved more than 50 per cent of the integration process. We will install an advanced core business system at EBI by October or November this year and the same system will be installed at NBD during the first quarter of 2009.

"We are working on a new brand for both banks and also legal issues. The two banks are still operating as separate legal entities and we are in the process of integrating the legal aspects.

"This is the first merger of its kind in the country and we need the agreement of several authorities to integrate the legal aspects. We hope to finalise all integration aspects by the end of the first quarter of 2009."

Al Tayer and Kraus were speaking at the inauguration of Emirates NBD's large corporate unit, which will manage assets of Dh130 billion – 40 per cent of the total assets of the group. Kraus said the unit would offer a wide range of banking services and products to more than 600 large corporate clients.

Mahdi Kazim, General Manager of Corporate Banking, said Emirates NBD would soon announce a $1.5 billion syndicated loan for a UAE government financial body. "We are the underwriter and book runner of this major syndication in the country," he added. "The deal will be finalised within two weeks."

Kazim said the fall in the country's interest rates had led to a decline in deposits. But he stressed that this would not affect the banking sector's profits because the lower rates were encouraging businesses to increase their borrowing. Emirates NBD said yesterday it arranged a $75m club loan facility for UkrSibbank, Ukraine's third largest bank, which is 51 per cent owned by BNP Paribas.