Dubai unveils financial giant

Dubai: Dubai yesterday unveiled Emirates NBD, a financial powerhouse that will support its vision of creating world-class financial institutions in the region.

The Dubai Government will control the Gulf region's largest bank by asset size following the merger between National Bank of Dubai and Emirates Bank, according to the terms announced yesterday.

The merger will be implemented by the creation of a new company, Emirates NBD PJSC, licensed by the UAE Central Bank, which will offer to acquire the share capital of EBI and NBD in exchange for shares in the new entity.

"The integration of two of the UAE's best-known financial institutions will create a UAE champion and a regional leader. This merger reinforces Dubai's position as a world class financial centre," His Highness Shaikh Mohammad Bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, said in a statement yesterday.

The merger created the GCC's largest bank with an approximate market capitalisation of Dh41.3 billion. Prior to the merger, the Government of Dubai held 76.62 per cent of EBI and 14.25 per cent of NBD shares.

"The new company, Emirates NBD, will be 56 per cent owned by the Dubai Government after the completion of the merger," Ahmad Humaid Al Tayer, chairman of the merged entity, told reporters. Each NBD share will be exchanged for 0.95 share in Emirates NBD, valuing the NBD share at Dh8.84, which equates to a 14 per cent premium to the NBD share price.

In the all-share swap deal, the Emirates Bank share is valued at Dh9.30 for one Emirates NBD share, which effectively means both boards have accepted an overall exchange ratio of 0.95 EBI share for one NBD share.

Landmark merger

"This is a landmark deal, bringing together two high quality banking businesses. It offers significant benefits to shareholders, customers and of course staff," said Shaikh Ahmad Bin Saeed Al Maktoum, Chairman of the Joint Steering Committee established by EBI and NBD in connection with the proposed merger.

Following the merger announcement on July 2 both banks had suspended trading of their shares on Dubai financial markets. The trading will resume on July 15 until the respective extra-ordinary general meetings approve the merger and de-list the shares.

The merger is expected to create a market leader in the region and the new entity is expected to create approximately Dh195 million in additional annual revenues.

"By combining two of the UAE's strongest banks we are building a leading banking institution for the UAE and the wider region," said Abdullah Mohammad Saleh, Vice-Chairman of Emirates NBD.