Emirates NBD, the largest Gulf bank by assets, yesterday took over Dubai Bank, an Islamic bank fully owned by the Government of Dubai.
The acquisition was done on the orders of His Highness Shaikh Mohammad Bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE, in his capacity as Ruler of Dubai.
"This [the acquisition] comes in line with the Dubai Government's efforts to enhance the banking sector in the emirate," according to a press statement from the Dubai Government Media Office.
"The acquisition is a practical translation of Dubai Government's commitment to implement a comprehensive approach that contributes to strengthening the domestic banking sector and enhancing the UAE's leading financial position in the Gulf and Middle East," Shaikh Ahmad Bin Saeed Al Maktoum, Chairman of Emirates NBD, said in a statement.
Addressing the media through a conference call yesterday, Emirates NBD's and Dubai Bank's managements said the deal is positive for both banks.
Following the acquisition, Dubai Bank will become a fully-owned Islamic banking subsidiary of Emirates NBD.
In a knee-jerk reaction to the news, Emirate NBD shares plunged 1.6 per cent yesterday.
Emirates NBD, which already has Emirates Islamic Bank, another Islamic bank within the group, has no immediate plans to merge the two entities. "Dubai Bank will remain another Islamic banking brand within the group along side Emirates Islamic Bank. Once the transaction is complete we will explore the synergies," said Rick Pudner, Chief Executive of Emirates NBD.
The transaction will not have any adverse impact on the balance sheet of Emirates NBD, Pudner said.