While JP Morgan and HSBC were hired as joint global coordinators, by Ahli United Bank, the likes of Bank ABC, Dubai Islamic Bank, Kamco Invest, KFH Capital, Kuwait International Bank and Mashreq joined as joint lead managers.

Recently, it was also reported that Dubai Islamic Bank (DIB) is also planning to soon sell US dollar-denominated senior Sukuk, or Islamic bonds. It is believed that DIB, which is the largest Islamic lender in the UAE, has already hired banks for the deal, which is expected as soon as next week.

According to the IIF, this year, the Gulf raised a combined $95 billion in the international markets, while in 2020 international bonds from the region totalled $111 billion, dominated by sovereigns and quasi-sovereigns.

According to a report by S&P Global Ratings, global Islamic Finance is set to grow by 12 percent during 2021 and 2022, after slowing down to 10.6 percent in 2020. The growth of Islamic Finance this year and the next, will be driven by increased Sukuk issuance in key markets.

Sukuk issuance across the globe this year is forecasted to increase by $140 billion to $155 billion, the report said. Sukuk issuance dropped in 2020 to $139.8 billion due to the coronavirus pandemic from $167.3 billion in 2019.

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It is reported that debt issuance in the Gulf region has already exceeded last year’s total, crossing the coveted $100 billion mark. However, in a report, global credit rating agency Moody’s said that global issuance of sukuk is expected to decline in 2020 after four years of consecutive growth. Moody’s expects global sukuk issuance to be $170 billion this year, down from $179 billion in 2019.

Last month, Dubai Islamic Bank reported Dh3.12 billion net profit for nine-months of 2020, down 22 percent year-on-year. The bank reported a total income of around Dh9.9 billion during the period. Its net operating revenue also increased to Dh6.9 billion supported by core business growth, robust fees and commissions and foreign exchange income of Dh1.32 billion.

Earlier this year, the board of directors at Dubai Islamic Bank recommended its management to increase the foreign ownership limit in the bank’s share capital. While the foreign ownership limit at Dubai Islamic Bank stood at 25 percent, the board of Dubai Islamic Bank seeks to increase it to 40 percent.

The bank also completed the integration of Noor Bank earlier this month, following the completion of the merger of both banks.

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While the foreign ownership limit at Dubai Islamic Bank currently is 25 percent, the board of Dubai Islamic Bank wants it to be increased to 40 percent.

The change is subject to both corporate and regulatory approval.

Dubai Islamic Bank is set to become the latest bank to increase the foreign ownership limit in the GCC. Last year, First Abu Dhabi Bank, which the biggest lender in the country, proposed a similar change. Other banks to do so in the region include Emirates NBD and Abu Dhabi Islamic Bank.

The changes are being proposed to attract more foreign investments and help the banks stay competitive.

Dubai Islamic Bank’s chief executive Adnan Chilwan told the media, “As the UAE enters a new phase of economic growth, we will continue to drive our long-term sustainable growth agenda.”

Last year, Dubai Islamic Bank also completed the acquisition of its rival Noor Bank through a share swap deal to become the largest Islamic bank in the world. The deal also helped Dubai Islamic Bank to become the fourth largest bank in the UAE by assets after First Abu Dhabi Bank, Emirates NBD, and Abu Dhabi Commercial Bank.

The Dubai Islamic Bank and Noor Bank merger deal is also expected to position Dubai as a global centre for Islamic Finance.

Earlier this month, it was reported by the media that Dubai Islamic Bank could cut around 500 Noor Bank jobs as a part of the integration process.

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DIB will also become the fourth largest bank in the UAE by assets after First Abu Dhabi Bank, Emirates NBD and Abu Dhabi Commercial Bank.

Under the terms of the agreement, DIB issued 651,159,198 new shares which will be listed on the Dubai Financial Market. The acquisition see Noor Bank integrate its operations with with DIB, the media reports said, 

Mohammed Ibrahim Al Shaibani, Chairman of Dubai Islamic Bank, told the media that, “The acquisition of Noor Bank is a landmark achievement, establishing DIB as one of the largest Islamic banks in the world and amongst the largest banking entities in the UAE. In line with our strategy, the completion of this deal means that we remain ideally positioned to expand our footprint in the region and beyond, in addition to supporting the UAE’s vision for growth and prosperity.”

DIB’s acquisition of Noor Bank is expected to increase shareholders’ profitability in the long term. Noor Bank’s chief executive John Iossifidis announced his exit in an internal memo to all employees. His resignation came at a time when shareholders of both banks approved the acquisition. 

It was reported that Iossifidis would continue his leadership for a short period. After that, Dubai Islamic Bank CEO Adnan Chilwan will assume control until the merger is completed. Iossifidis joined Noor Bank in 2017. Previously, he worked at Mashreqbank, the oldest privately owned bank in the UAE. 

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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.

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The board of directors of Dubai Islamic Bank are set to meet on November 25, 2019, to discuss the possible acquisition of Noor Bank.

The news of a possible acquisition of Noor Bank by Dubai Islamic Bank first came out earlier this year. Reportedly, the board of directors of Dubai Islamic Bank held a meeting in the month of June as well and gave its approval with regard to the acquisition, however, no decision has been taken as of yet.

According to Maria Elena Ponceca, a senior analyst at Al Ramz Capital, 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.

She told the local media, “It would make economic sense, especially if Noor will be acquired at an attractive discount and Dubai Islamic Bank takes advantage of the potential consolidation by further cleaning the books of both banks,”

If Dubai Islamic Bank acquires Noor Bank, the combined entity will be one of the largest and most influential Islamic finance institutions in the world. It would have a market share of 10 percent with assets worth Dh275 billion.

Last month, Noor Bank reported a 12 percent drop in its net profit for the third quarter of 2019. The drop in profit is due to higher impairment charges as well as a reduction in income from Islamic financing.

Currently, there are six standalone Islamic banks operating in the UAE, which are Dubai Islamic Bank, Emirates Islamic, Noor Bank, Abu Dhabi Islamic Bank, Sharjah Islamic Bank, and Ajman Bank.

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Noor Bank’s rise in revenue is attributed to its income generated from net financing, investments and non-funded income, media reports said. 

Noor Bank’s impaired financing ratio improved to 4.3 percent and the capital adequacy ratio reached 17.2 percent during the first six months of the year. Its total assets increased 4 percent. Customer financing and customers deposits rose 5 percent and 11 percent respectively.

“We attribute our record results in the first half to our robust balance sheet and solid performance across our businesses,” John Iossifidis, chief executive of Noor Bank, said. “Our disciplined cost management and lower impairment charges have significantly contributed to the surge in net profit with an improved cost-to-income ratio.”

Dubai Islamic Bank is in the process of acquiring Noor Bank as it has received an approval from its board. The acquisition will make Dubai Islamic Bank the fourth largest bank by assets in the UAE. “Noor Bank cost base is roughly one third that of DIB,” Vrajesh Bhandari, senior portfolio manager with Al Mal Capital told Gulf News.

Of late, banks in the UAE and in the Gulf are actively seeking mergers and acquisitions to improve their business. First Abu Dhabi Bank, a merger between National Bank of Abu Dhabi and First Gulf Bank is ranked the largest by assets. 

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With the acquisition, Dubai Islamic Bank will become one of the largest Islamic banks in the world itself with combined assets worth $76 billion or Dh278 billion. A money manager at Shuaa Capital told Bloomberg that DIB may pay 0.8 to 0.9 times book value for Noor Bank shares.

Dubai Islamic Bank said in a statement that the acquisition will lead to cost efficiencies, contribute to profitability, and help DIB offer competitively priced products and services across a more diversified portfolio. DIB also expects the acquisition to  accelerate digitisation and drive innovation.

The bank told the Dubai Financial Market in a statement that it will complete all legal processes for the completion of the deal. The Dubai lender did not specify when shareholders will vote on the deal or when it will complete the evaluation process.

Adnan Chilwan, group CEO of Dubai Islamic Bank said that the bank hopes to accelerate the growth and popularity of Islamic finance across the region and beyond with the deal. He also told the regional media that the acquisition of Noor Bank was in line with Dubai Islamic Bank’s strategy that strikes a fine balance between shareholder interests and market dynamics.

Mohammed Al Shaibani, the chairman of DIB, said in a statement: “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.”

Investment Corporation of Dubai, Dubai’s main state-owned holding company, owns 28 percent in DIB. The holding company is also one of the largest shareholders in privately-owned Noor Bank also.

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His Excellency Juma Bin Humaidan, deputy director general of DLD, said, “Our new e-mortgage agreement with DIB is aligned with our efforts to support Dubai’s digital transformation and provide convenient transactions for all parties. We would like to express our gratitude to DIB’s staff for their continued cooperation with us, and their support of DLD initiatives that contribute to the development of the Emirate’s real estate sector.”

Mohamed Al Nahdi, deputy CEO and chief Operating Officer at DIB, said, “Our cooperation with DLD for the new e-mortgage services is an important step for our customers. The e-mortgage agreement with DLD will help provide a more effective solution with the aim of saving our customers time and effort. As the largest Islamic bank in the UAE, DIB has played a vital role in strategic partnerships with government institutions in support of Dubai’s vision of creating a culture of innovation. As the largest mortgage provider in the UAE, DIB’s collaboration with DLD is another testament to our leadership in the banking sector and supporting Dubai’s drive for digital transformation.”

Sultan Al Akraf, senior director of the Real Estate Registration Department at DLD, added that the initiative is a new step in DLD’s efforts to deliver integrated e-services to its customers. “It reflects the vision of our leadership to spread happiness, elevate Dubai’s status as the smartest city in the world, and enhance the attractiveness of real estate investment to drive sustainable growth in the sector. At DLD, we believe in public-private sector integration, and enter into partnerships that contribute to providing the best services to our customers. The new agreement with DIB strengthens our existing partnership with the world’s leading Shariah-compliant bank, and also ensures increased customer satisfaction by providing excellent services and saving time.”

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