The
Gulf''s largest bank by assets came in to existence in Dubai today with the merger
of Emirates Bank International Ltd. and its smaller rival, National Bank of Dubai,
in $11.3-billion deal. Dubai is a part of the United Arab Emirates federation. With
combined assets worth $45 billion, the new entity surpasses Saudi Arabia''s National
Commercial Bank as the Gulf''s largest lender by assets and also tops the market
value of National Bank of Abu Dhabi, until now the largest in the United Arab
Emirates. The
integration will save 151 million dirhams a year in costs by 2010, higher than
the 90 million dirhams earlier estimated, with the bulk of cost synergies coming
from areas like retail banking. The
shareholders of National Bank would own 33.7-per cent of the new entity with the
rest being with Emirates Bank shareholders. The government of Dubai owns 76-per
cent of Emirates Bank and 14 percent of National Bank, Dubai''s fourth largest
by market value. Emirates
Bank chairman Ahmed al-Tayer and CEO Rick Pudner will be chairman and the chief
executive of the new bank respectively. The board of the new bank would have six
members from each bank, including National Bank''s chief executive Douglas Dowie. Created
at the behest of Dubai''s ruler, the merged bank, Emirates NDB PJSC, will have
about a fifth of total assets, loans and deposits in the United Arab Emirates,
the world''s sixth largest oil exporter. In
March the two banks, which first attempted a merger in 1999, had been asked to
merge by Dubai''s ruler Sheikh Mohammed bin Rashid al-Makhtoum to form a lender
large enough to meet the demands of a rapidly growing economy. The
deal values National Bank shares at 8.84 dirhams ($2.41), which compares with
their last traded price of 9.15 dirhams on 1 July, after which trading in shares
of both lenders was suspended. Shares in Emirates Bank, Dubai''s second largest
bank by market value, are valued at 9.30 dirhams under the terms of the deal,
on a par with their last traded price on the same date. The
banks said National Bank shareholders would get a premium of 14 percent to the
last trading price before the merger was first announced in March. Trading
the share would resume on 15 July. According to Pudner, the two banks will initially
be two legal entities, operating as subsidiaries of Emirates NBD and within 18
to 24 months will be fully integrated. Shareholders
of both banks must approve the merger plan before it takes effect.
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