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18 December 2019
INVESTMENT

Dubai Islamic Bank shareholders approve Noor Bank acquisition

The GCC financial services industry is witnessing a wave of consolidation as banks seek ways to improve competitiveness and boost capital amid slowing economic growth.

iStock/Jeff Kingma

by Kudakwashe Muzoriwa

UAE’s Dubai Islamic Bank’s (DIB) shareholders have approved the acquisition of unlisted Dubai-based Noor Bank subject to regulatory approvals.

Dr. Adnan Chilwan, Dubai Islamic Bank’s Group CEO, said, “We anticipate that integrating the two operations will generate significant synergies, leading to improved efficiencies and greater contribution to profitability with a positive impact on shareholder returns.”

The shareholders gave approval for the acquisition through an increase of DIB's capital from 6.6 billion shares to 7.2 billion shares, with a share swap ratio of one new share in DIB for every 5.49 Noor Bank shares, translating into an issuance of about 651 million new DIB shares.

The acquisition cements DIB’s position as one of the world’s largest Islamic finance institutions and is expected to enhance Dubai’s position as the capital of Islamic economy by creating the region’s most progressive Shari’ah-compliant banking group.

H.E Mohammed Al Shaibani, Chairman of DIB, said, “DIB is now the UAE's biggest Islamic lender with AED 230 billion of assets as of 30 September 2019 and with the acquisition of Noor Bank, we are on track to expand our footprint in the region and beyond.”

The deal comes after a wave of mergers in the UAE's banking sector on the back of tougher competition and regulation, coupled with a slowing economy and a slide in house prices.

The Abu Dhabi government completed the merger of Abu Dhabi Commercial Bank, United National Bank and Al Hilal Bank following the successful tie-up of its two major banks to become First Abu Dhabi Bank in 2017.

Similarly, the Central Bank of Kuwait ‘conditionally’ approved the proposed merger between Kuwait Financial House (KFH) and Bahrain’s Ahli United Bank (AUB). CBK granted KFH permission to acquire 100 per cent of the capital shares of AUB and the approval shall be conditional upon fulfilling certain requirements by the central bank.

Moody’s said that the outlook for GCC banks remains stable, except Oman, underpinned by solid economic growth as well as the banks’ strong capital buffers and substantial liquidity.

Saudi British Bank (SABB) and Alawwal agreed to merge their businesses in June 2019, after receiving regulatory and shareholder approvals, creating the third-largest bank by assets in the Kingdom.

However, the DIB shareholders’ approval comes a day after Saudi Arabia’s National Commercial Bank and Riyad Bank ended talks to merge in a deal that would have created a lender with $200 billion in assets.

 


RELATED STORIES: Ahli United Bank Kuwait Financial House Riyad Bank Dubai Islamic Bank Noor Bank Saudi British Bank M&A Alawwal National Commercial Bank


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