Dubai Bank and EIB to integrate operations

Dubai: An operational merger of Dubai Bank and Emirates Islamic Bank (EIB), two Islamic banking entities owned by Emirates NBD, is being worked out and the details are to be finalised soon, according to sources close to the discussions.

"A full integration of the operations of these two Islamic banking entities is being considered. While the retail banking business of Dubai Bank is likely to be merged with the EIB's retail business, the corporate banking business is likely to be kept as a separate division under the EIB umbrella," said a source.

Not clear

It is not clear if Dubai Bank will be fully merged with EIB and its brand and banking licence will cease to exist after the merger.

Last month Emirates NBD, the largest UAE bank by assets, took over Dubai Bank, a bank fully-owned by the Government of Dubai, on the directions of the government.

Addressing the media through a conference call after the acquisition, Rick Pudner, Chief Executive of Emirates NBD, said that there was no immediate plan to merge Dubai Bank with EIB and the synergies of a merger will be considered once the transaction is completed. The acquisition is to be completed by the end of the year.

Last May the Government of Dubai acquired 100 per cent of Dubai Bank, which was previously owned 30 per cent by Emaar Properties and 70 per cent by Dubai Holding.

At the end of 2009, Dubai Bank had total assets of Dh17.4 billion against total liabilities of Dh15.7 billion.

It suffered a loss of Dh290.6 million, wiping out 15 per cent of its equity, driven by high loan losses, investment losses and a high cost/income ratio.

Customers' deposits stood at Dh14.9 billion at the end of 2009.

Negative results

The bank has not yet reported its 2010 results. Rating agency Fitch said it expects a loss for 2010 as it expected full-year results for 2010 to be "negatively affected by its significant exposure to certain Dubai entities that are being restructured.

From October there was on and off speculation about the possibility of Emirates NBD acquiring Dubai Bank and merging it with Emirates Islamic Bank, an Islamic bank belonging to the group.

Analysts said the consolidation of this type (a weaker bank being taken over by a stronger bank) is a good sign to play out the distress situation since the 2008 financial crisis.

Kamran takes over as GM

Emirates NBD, the UAE's largest lender, has consolidated its investment banking and financial advisory businesses under its Emirates NBD Capital and appointed Mohammad Wajid Kamran as general manager of the arm, according to sources.

Kamran was previously the bank's general manager of institutional and international banking and debt capital markets.

Kamran was actively involved in the bank's debt restructuring negotiations with Dubai World.

The bank has exposure to some leading government related entities including Dubai Holding and is engaged in the debt restructuring of some of these entities.