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08 June 2023

DIB retains majority share in Sudan bank

By Dima Hamadeh

The merger of two banks in Sudan will leave Dubai Islamic Bank (DIB) with a 28 per cent stake in the combined company. Currently, DIB owns 55 per cent of the Bank of Khartoum, which is joining hands with the Emirates and Sudan Bank (ESB). Sudan’s central bank will have a 10 per stake in the merged entity, which will keep the Bank of Khartoum name.

The Dubai bank is a member of the ESB founders’ committee.

Almost 60 per cent of the remaining shares in the new venture will be held by major UAE investors who are also members of the committee, including the Sharjah Islamic Bank and the Abu Dhabi Islamic Bank.

The merged company is planning to raise Dh1.1 billion capital in private placements and will be the ninth largest African joint stock bank in terms of capital and assets, excluding Egypt. The deal was expected to be confirmed at a meeting on January 10, said spokesman Abu Baker Al Amin. Board members would be elected later in the month.

“The merger will strengthen the Bank of Khartoum’s regional and international presence supported by the wide network and expertise of Dubai Islamic Bank. It will also make a major contribution to the Sudanese economy,” he added.

The new bank will focus on developing and financing small- and medium-size enterprises and providing consumer, property and infrastructure finance and private and investment banking services.

“ESB is mostly known for corporate banking, whereas the new merged entity will combine those activities with the retail banking services currently provided by the Bank of Khartoum to enlarge its customer base and diversify.”

Shariah-compliant banking practices have been established in Sudan by many investors from the Gulf Cooperation Council region and other Arab states. Foreign investment in the banking sector has reached Dh12 billion.

Half the total came from the UAE and 12 per cent from Lebanon, while other investors were from Saudi Arabia, Kuwait, Malaysia and China. Sudan has become a magnet for businesses and financiers since the signing in 2005 of the peace treaty that ended the civil war between the north and south of Sudan.

Investors are encouraged by forecasts suggesting that the country is set for economic growth based on generally positive indicators of gross domestic product, balance of payments, balance of trade, exchange rates and foreign investments among others.

Big Expansion

The merger is expected to result in an expansion strategy for the next five to seven years that will include the UAE.

The Emirates and Sudan Bank (ESB) was established in 2005 with an authorised capital of Dh736 million. The ESB had completed a Dh310m private placement which received a strong response from investors in Sudan and the UAE.

Its Dh100m initial public offering launched in May 2005 was oversubscribed eight times.

The ESB focused on providing finance for large organisations and firms that work in the import and export industry in Sudan. The Sudan Government owned 99 per cent of the Bank of Khartoum until 2005, when the Dubai Islamic Bank acquired its stake.