K.T. Abdurabb, Arab News
Friday 13 July 2007
Last Update 13 July 2007 12:00 am
DUBAI, 13 July 2007 — A merger between National Bank of Dubai (NBD) and Emirates Bank International (EBI) has created the GCC’s largest bank, now known as Emirates National Bank of Dubai, which has an estimated combined capitalization of 41.3 billion dirhams ($11.3 billion).
“It is a merger to create a UAE banking champion and the GCC’s largest bank by assets,” said top bank officials yesterday at a press conference held at Dubai’s Emirates Tower.
EBI Chairman Ahmed Al-Tayer will be chairman of the new bank and NBD’s Chairman Abdullah Mohamed Saleh will be vice chairman. EBI Chief Executive Rick Pudner has been appointed as the new chief executive officer.
“The new company will be 56 percent owned by the Dubai government after the completion of the merger process,” Al-Tayer told reporters. “This merger offers a unique opportunity for our organizations to create a regional banking powerhouse with scale that will support our shared vision for international expansion,” he added.
Prior to the merger, the Dubai government held 76.62 percent shares of EBI and 14.25 percent of NBD shares. Shareholders of NBD will own 33.7 percent of the new entity and EBI shareholders the rest, the banks said in a statement.
The merger is likely to create synergies worth almost $100 million. The banks said $41 million of the synergies would come from cost savings, including $14.2 million from retail branch and ATM network consolidation.
The merged bank is expected to save another $10.3 million on its IT operations when it reallocates personnel from NBD to EBI’s dedicated IT center. There could also be $53.1 million in revenue synergies created from cross-selling opportunities and an increased capacity for cross-border risk, the banks said.
The two banks, which first attempted a merger in 1999, will top the market value of National Bank of Abu Dhabi, until now the largest in the country. The two banks will initially be two legal entities, operating as subsidiaries of Emirates NBD. Within 18 to 24 months, the banks will be fully integrated, Rick Pudner told reporters.
“This is a true merger, it is a merger of equals. It is not a takeover,” Pudner said, pointing out that the board of the new bank will have six members from each lender, including National Bank Chief Executive Douglas Dowie.
EBI and NBD have requested that trading in their respective shares on the Dubai Financial Market be resumed on July 15. Shareholders of EBI and NBD will be given an opportunity to accept the terms of the proposed merger and the offer based on a formal offer document.
The boards of directors believe that the company will be well positioned to capture attractive domestic and regional opportunities. With increased financial strength, economies of scale and financial flexibility, the company will be able to grow and deliver value to its shareholders, customers, and employees. EBI and NBD have nominated six members each to serve on the board of directors of Emirates NBD.