(MENAFN- Khaleej Times) Dubai Islamic Bank outlined its plans on Monday to acquire Noor Bank, another Shariah-compliant financial institution based in Dubai, to emerge as the region's most powerful Islamic banking group with combined assets of Dh275 billion.
After its board recommended on Sunday to go ahead with the acquisition, DIB, one the largest and oldest Islamic banks in the world, said the deal, the latest in a series of mergers over the past few years, would further strengthen UAE's importance as a hub for Islamic finance while reinforcing the bank's position as an Islamic finance powerhouse in the region.
DIB shares rose after details of the state-controlled bank's board meeting emerged, which recommended buying 100 per cent of Noor Bank. Post the completion of the deal, Noor Bank's operations will be integrated and consolidated within DIB, the bank said in a statement.
The date and agenda for the general meeting including the terms and details pertaining to the acquisition will be announced after the same has been approved by competent regulatory authorities.
"DIB has consistently outperformed the market over last few years and this acquisition is set to enhance its influence, deliver increased market share and improve operational efficiencies," the bank said.
Mohammed Al Shaibani, chairman of DIB, said the bank has enjoyed unparalleled success over recent years following a successful strategy that has seen the bank outperform the market and play a pivotal role in establishing the UAE as a global hub for Islamic finance.
"This acquisition is another step in our plans to expand in the region and beyond. Innovation and service excellence sit at the very heart of our business and this will continue as we build scale through this acquisition and develop fresh new ways to improve the banking experience for our customers. In addition, this announcement will provide opportunities for economic growth and prosperity across the region, ensuring that the UAE's financial sector remains at the forefront of the Islamic economy," said Al Shaibani.
Dr Adnan Chilwan, Group CEO of DIB, said the acquisition of Noor Bank is in line with the disciplined yet flexible growth strategy which strikes the perfect balance between market dynamics and shareholder interest.
"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, digitization, product and business development and most importantly the customer experience."
Dr Chilwan said DIB's focus would remain on providing the highest standards of service and we are committed to integrating the two operations as quickly and effectively as possible in order to provide a seamless experience for our increased customer base.
"With a strong track record and a robust platform, the future can only be positive with the additional scale and reach that we will gain as a consequence of this acquisition. This scale will provide greater efficiencies and reduce our operational costs."
The merger, which will give further momentum to an ongoing banking sector consolidation wave in the UAE, would further strengthen Dubai's role as a global hub for Islamic finance, allowing greater investment and growth in key sectors driving the UAE, which is at the epicenter of the Islamic economy, in addition to supporting the nation's economic agenda.
Sachin Kerur, partner and head of Middle East Region, Reed Smith LLP, said as one of the largest and oldest Islamic banks, DIB reflects a gold standard for Islamic finance globally.
"Its consolidation will create a Dubai-based real power house. Post-merger the new bank will have significantly greater combined balance sheet and sectorial expertise. The shareholders will benefit from a much stronger and diversified bank which is able to compete stronger globally. This merger is also an important development for the Islamic finance industry which continues to grow and is already an important alternative for the conventional interest-bearing banking sector."
In May, following the merger of Abu Dhabi Commercial Bank, Union National Bank and Al Hilal Bank, the third largest banking giant in the UAE with Dh423 billion in assets came into being. The ADCB consolidation came more than two years after the merger of the National Bank of Abu Dhabi and First Gulf Bank to create the Dh671 billion First Abu Dhabi Bank.
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Issac John
Associate Business Editor of Khaleej Times, is a well-connected Indian journalist and an economic and financial commentator. He has been in the UAE's mainstream journalism for 35 years, including 23 years with Khaleej Times. A post-graduate in English and graduate in economics, he has won over two dozen awards. Acclaimed for his authentic and insightful analysis of global and regional businesses and economic trends, he is respected for his astute understanding of the local business scene.
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