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Dubai: There will be more bank mergers in the coming years as competition becomes intense in the GCC's banking sector, financial experts said.
Following on the heels of the merger between Emirates Bank International (EBI) and National Bank of Dubai (NBD), Nasser Saidi, chief economist for the Dubai International Financial Centre, believes other banks may consider similar moves.
"I believe there will be a wave of mergers and acquisitions throughout the UAE and in the rest of the region," he said.
The UAE has about 50 local and foreign banks and is considered an "overbanked" country.
Saidi expects at least one UAE bank to be among the world's top 100 banks in two to three years.
The EBI-NBD merger has already created the largest bank in the UAE, with $45 billion in assets.
"The region has liquidity, banking technology and management, and increasingly banks are looking to expand internationally. Mergers will create strong large banks that will have cross-border operations," he said.
Anees Sadek, a managing partner at accounting firm Deloitte & Touche, also sees the merger triggering off further consolidation activity.
"The GCC has yet to produce a truly regional bank with the size and range to compete with major international banks," he said.
He said the merger brings together the Dubai government and top UAE business families under one institution. The government owns 76 per cent of EBI and has 14 per cent share in NBD.
No details of how the merger process will be completed have been announced yet.
"It is premature at this stage to give concrete information on the process related to the merger," NBD Chairman and Deputy Chairman of the new entity, Abdullah Mohammad Saleh, said in a statement.
He assured shareholders and staff of NBD that "everything possible will be done to protect their interests."
Raju Menon, managing partner at Morison Menon Chartered Accountants, said the merger would "definitely affect investor wealth".
"The extent to which the respective share values are going to be affected would depend on the share swap arrangement, which is yet to be announced," he said.
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