Dubai Islamic Bank (DIB)’s board has approved its acquisition of lender Noor Bank to create “one of the largest Islamic banks in the world” with combined assets of nearly Dhs275bn.
The board will now recommend the deal to DIB’s shareholders after obtaining all necessary approvals from the regulatory authorities, and taking all legal procedures related to the evaluation as per the commercial companies law, a statement said.
Following the completion of the deal, Noor Bank’s operations will be integrated and consolidated within DIB.
State-owned Investment Corp of Dubai (ICD) is a common shareholder in both the banks, with a 28.37 per cent stake in DIB and a stake of more than 22.7 per cent in Noor Bank.
Adnan Chilwan, Group CEO, DIB said: “We have always been open to both organic and inorganic growth as long as profitability and returns are protected and this transaction is no different. The economics of the deal will allow us the opportunity to capitalise on synergies, notably cost efficiencies, digitisation, product and business development and most importantly the customer experience.
“Islamic finance is increasingly acknowledged as a viable alternative to conventional banking and, through this acquisition, we believe that we can geometrically accelerate the growth and popularity of Shari’a compliant finance across the region and beyond.”
The new size and scale will allow DIB to expedite its strategy to expand across the far east, sub-continent, and east Africa with Dubai as the hub, the statement said.
“This scale will provide greater efficiencies and reduce our operational costs,” said Chilwan.
The UAE, which has 50 commercial banks including 22 local lenders, is seeing a wave of consolidations in the market as banks seek to increase capital due to slowing economic growth.
Three of Abu Dhabi’s banks – Abu Dhabi Commercial Bank, Union National Bank and Al Hilal Bank are currently in the midst of a merger.
That follows the combination of National Bank of Abu Dhabi and First Gulf Bank in 2017 to create a lender with $175bn of assets.