Dubai Islamic Bank
With the planned acquisition, DIB said it would consolidate its position as the one of the largest Islamic banks in the world with combined assets of nearly Dh275 billion. Image Credit: Gulf News Archives

Dubai Islamic Bank (DIB) said it has received a nod from its board to acquire 100 per cent of Noor Bank, making it the fourth largest bank by assets in the UAE after the acquisition.

The board will recommend to bank’s shareholders to consider the acquisition at the general meeting after obtaining all necessary approvals from the regulatory authorities.

Dh275b

will be the combined asset size of the new entity after merger

This would make the combined entity one of the largest Islamic banks, cornering around 10 per cent market size, with a total asset size of Dh275 billion, just shy of third-ranked Abu Dhabi Commercial Bank (ADCB).

“It would be interesting to see the estimate for potential synergies – most of which would be through rationalizing costs, including cost of funds. Noor Bank cost base is roughly one third that of DIB,” Vrajesh Bhandari, senior portfolio manager with Al Mal Capital told Gulf News.

Banks in the UAE and in the Gulf region have been resorting to mergers and acquisitions to scale up their businesses in the face of slowing economic growth. 

In terms of assets, First Abu Dhabi Bank, which was a result of a merger between National Bank of Abu Dhabi and First Gulf Bank, ranked the biggest with Dh733 billion, followed by Emirates NBD and ADCB.

“This scale will provide greater efficiencies and reduce our operational costs. However, we recognise the importance of maintaining strong governance and will be working tirelessly to embed robust compliance across the group to ensure that our customers, business partners and regulators enjoy the utmost confidence in the new combined operation,” Dr Adnan Chilwan, GCEO, Dubai Islamic Bank, said.

The date and agenda for the General Meeting, including the terms and details pertaining to the acquisition, will be announced after they have been approved by regulatory authorities.

“This acquisition is another step in our plans to expand in the region and beyond,” Mohammad Al Shaibani, Chairman of DIB, said in a statement. Shares of DIB remained suspended due to the board meeting on Sunday. DIB shares have been underperforming the general index. The shares have gained 2 per cent since January 1, compared to 5.7 per cent gains on the Dubai index.

underperforming the general index. The shares have gained 2 per cent since January 1, compared to 5.7 per cent gains on the Dubai index.