EBI mulls merger with subsidiary

Emirates Bank International Ltd (EBIL) is reportedly mulling a merger with its subsidiary Middle East Bank (MEB).

"Although nothing has been decided at present, we are reviewing the Group's strategy of how to go forward," stated Sulaiman Al Mazroui, board member of MEB and chief marketing manager, Emirates Bank Group.

The suggestion to merge was understood to have been raised at the Group's board meeting last month.

"We are looking at restructuring the entire strategy of marketing our products and services through multiple channels of distribution and utilising the services of group companies," he said.

The merger proposal will likely to be raised at the forthcoming board meeting in September. MEB is a 99.8 per cent EBIL subsidiary. EBIL itself is around 77 per cent stake owned by the government.

Other group subsidiaries include Diners Club, Dubai International Bank Ltd (Bahamas), Emirates National Bank Ltd (Bahamas), Emirates Merchant Bank Ltd (Bahamas), Emirates Financial Services, Network Corporate Services, Dubai Bank Ltd, and National General Insurance Co.

EBIL and National Bank of Dubai had earlier been in discussions with a view to merging, but the talks had ultimately fallen through two years ago. Banking circles said the move makes sense since MEB also deals with the same line of banking products.

But more interestingly, they pointed out that should the merger go through, the Emirates Bank Group will be left with an extra precious banking trade licence.

Rather than talking about mergers as the case used to be, the UAE banking sector is currently hitting headlines with their moves on Islamic banking. Already, National Bank of Sharjah has decided to convert its banking licence to Islamic banking.

A couple of other banks are also said to be planning to come out with Islamic products and thereafter convert them into Islamic banks. The sources however noted it is premature to speculate whether the Emirates Bank Group nurses any intention to set up an Islamic bank in future.

But the development also gains significance in a scenario where experts believe the UAE is overbanked, and that unless some banks merge to create larger banks - thus reducing the number of players here - the sector will face multifaceted threats including those from larger foreign banks.