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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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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