The Emirates NBD Head Office on Baniyas street in Dubai. Talks for potential business partnership is underway between Dubai’s leading bank Emirates NBD and Bank Leumi of Israel, according to market sources. Image Credit: Ahmed Ramzan/ Gulf News Archives

Dubai: Talks for potential business partnership is underway between Dubai’s leading bank Emirates NBD and Bank Leumi of Israel, according to market sources.

Emirates NBD did not comment on the reports when approached by Gulf News.

Last Thursday Bloomberg reported quoting Shmulik Arbel, head of Bank Leumi’s corporate division that the Tel Aviv-based lender is in cooperation talks with a ‘leading bank’ in Dubai without identifying the bank.

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“The fact that Emirates NBD has not denied earlier reports of talks with the Israeli bank and the recent normalisation of diplomatic relations between the two countries point to something ‘really’ happening between two entities,” said a market source.

Although the talks between the two entities are very significant as a first step towards the normalisation of business between the two countries, any deal of cooperation will require board level approvals of both banks and regulatory approvals of the central banks from both countries.

Formailisation of ties

Following the announcement of the peace accord with Israel, President His Highness Sheikh Khalifa bin Zayed Al Nahyan, has issued a Federal Decree-Law No. 04 of 2020, abolishing the Federal Law No. 15 of 1972 regarding boycotting Israel and the penalties thereof. The Decree is expected to expand diplomatic and commercial cooperation with Israel.

“The formalization of ties with the State of Israel through this new law will pave way for more businesses in both countries to explore business opportunities,” said an analyst.

Analysts said the normalization of ties would be mutually beneficial to both countries in terms of business and scientific cooperation.

“This [the normalized relations] will have important economic and geopolitical ramifications for both sovereigns, with the UAE particularly benefiting from enhanced tourism and transportation opportunities, while the formalisation of ties will support Israel’s improving security situation,” said Thaddeus Best an analyst at Moody’s.

More collaboration

Analysts said with the law in place making the diplomatic and business relations now official, more business negotiations and co-operation agreements are likely the days ahead.

According to rating agency Moody’s, over the medium term, the infusion of Israeli foreign investment, human capital and intellectual property could support the development of the knowledge economy in the UAE.

“We expect it [Israel] will also benefit from the improving ties, particularly in sectors in which it can export expertise to the UAE such as IT, desalination technology, architecture, further medical cooperation and advanced agriculture,” said Best.

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According to Israel’s Economy Ministry, the normalisation of ties could increase exports to the UAE to $300-$500 million annually (0.3%-0.4% of Israeli exports), and UAE investments in Israel could reach $350 million a year (1.9% of inbound foreign direct investment). Israel will also benefit from access to more secure oil supplies, Moody’s said in a recent note.