The board of Dubai Islamic Bank has approved a share-swap deal with Noor Bank – a Dubai-based Islamic Bank.
According to the deal, one share in Dubai Islamic Bank will be swapped with 5.49 shares in Noor Bank through the issuance of 651,159,198 new Dubai Islamic Bank shares.
The deal will see Dubai Islamic Bank acquire 99.99 percent of shares of Noor Bank from Noor Investment Group and Emirates Investment Authority.
Dubai Islamic Bank, which is the largest Islamic bank in the UAE, will present the share-swap deal with Noor Bank to its shareholders during the shareholder’s general meeting, which is scheduled to be held on December 17, 2019.
The bank also announced that it has secured the regulatory clearance from the Central Bank of UAE for the proposed acquisition of Noor Bank. In a statement, the bank revealed that it received approval from the apex bank on September 18, 2019.
The news of the possible acquisitions first came out earlier this year. The board of directors of Dubai Islamic Bank held a meeting in the month of June with regard to the acquisition, however, no decision was taken back then.
Maria Elena Ponceca, a senior analyst at Al Ramz Capital told the local media that Dubai Islamic Bank wants to further consolidate its domestic prominence by acquiring Noor Bank to increase market shares in loans and bank deposits by roughly 2 percent each.
According to her, Dubai Islamic Bank’s decision to acquire Noor Bank would make economic sense if it is acquired at a discount and Dubai Islamic Bank takes advantage of the potential consolidation by cleaning the books of both the banks.