UAE banks to merge to create largest Gulf lender

Emirates Bank International Ltd and National Bank of Dubai said on Monday they had agreed to merge to create the Gulf's largest bank by assets with a combined market value of over $11 billion. The banks said they would consult regulators before giving details of the deal and asked the bourse to suspend their shares.
The process could take 15 days, a spokesman for the banks said. The lenders said in March they would merge at the behest of Dubai's ruler to form a bank large enough to meet the demands of a rapidly growing economy, and they appointed Goldman Sachs Group to advise them on the deal. Shareholders of National Bank, the smaller of the two, would probably be given stock in government-controlled Emirates Bank, said Raj Madha, a senior research analyst at EFG-Hermes.
"It's not a merger of equals," he said. Emirates Bank shares closed on Sunday at 9.30 dirhams and National Bank's at 9.15 dirhams, although Madha said National Bank shareholders could get Emirates stock priced as much as 15 percent lower. National Bank is likely to retain considerable independence as part of the Emirates Bank group, he said.
"It is quite unlikely that National Bank of Dubai will be completely absorbed at this stage. I think it will continue as an entity," Madha said. The government of Dubai, part of the United Arab Emirates federation, owns 76 percent of Emirates Bank and 14 percent of National Bank.
Majority shareholders of National Bank, Dubai's fourth-largest by market value, would have little choice but to acquiesce to a deal blessed by the emirate's ruler, Standard & Poor's credit analyst Anouar Hassoune said when the merger was announced in March. Trading in the shares will remain suspended until details of the deal are announced, said Essa Kazim, chairman of the Dubai Financial Market.
The two banks, which first attempted a merger in 1999, would have a combined capitalisation of $11.25 billion at Sunday's closing price, topping that of National Bank of Abu Dhabi, the largest bank by market value in the United Arab Emirates. They had assets worth $48.7 billion at the end of the first quarter, allowing the new entity to surpass Saudi Arabia's National Commercial Bank as the Gulf's largest lender by assets.