Dubai Islamic hires HSBC for Noor Acquisition

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Pedestrians pass the headquarters of Dubai Islamic Bank PJSC, in Dubai, United Arab Emirates. Photographer: Matilde Gattoni/Bloomberg

(Bloomberg) — Dubai Islamic Bank PJSC hired HSBC Holdings Plc to advise on its possible acquisition of smaller rival Noor Bank PJSC, according to people with knowledge of the matter.

Noor Bank is working with Barclays Plc on the deal, the people said, asking not to be identified because the discussions are private. An acquisition would create a lender with 278 billion dirhams ($76 billion) in assets.

Dubai Islamic Bank can see “a lot of synergies with an acquisition of Noor,” Chief Executive Officer Adnan Chilwan said last month after Bloomberg reported that the companies had held initial talks.

Related: Gulf States Confront New Era of Low Oil Prices With Merger Wave

The Middle East’s financial-services industry is witnessing a wave of consolidation as banks seek ways to improve competitiveness and boost capital amid slowing economic growth. Abu Dhabi has merged three of its banks after combining two of its biggest lenders in 2017. Banks in Saudi Arabia, Kuwait and Bahrain are also holding merger talks.

Dubai Islamic Bank and Noor Bank declined to comment, while HSBC and Barclays didn’t immediately respond to requests for comment.

Investment Corp. of Dubai, the emirate’s main state-owned holding company, is the largest shareholder in Dubai Islamic Bank with a 28 percent stake. It’s also one of the biggest investors in Noor Bank, a lender set up in 2008. Dubai Islamic Bank had assets of 227 billion dirhams at the end of March compared with Noor Bank’s 51 billion dirhams in December, according to data compiled by Bloomberg.

With assistance from Archana Narayanan. To contact the reporters on this story: Arif Sharif in Dubai at [email protected]; Dinesh Nair in London at [email protected]

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