Dubai Islamic Bank and Noor hire advisers for merger talks

The UAE's biggest Islamic lender is considering takeover of the smaller Noor Bank

DIB says accusation of other financial institutions is part of its expansion strategy. Mona Al Marzooqi / The National

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

Noor Bank is working with Barclays on the deal, the people said, asking not to be identified because the discussions are private. An acquisition would create a lender with Dh278 billion in assets.

DIB can see “a lot of synergies with an acquisition of Noor,” chief executive Adnan Chilwan said last month.

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.

DIB and Noor Bank declined to comment, while HSBC and Barclays did not immediately respond to requests for comment.

Investment Corporation of Dubai, the emirate’s main state-owned holding company, is the largest shareholder in DIB Bank with a 28 per cent stake. It is also one of the biggest investors in Noor Bank, a lender set up in 2008. DIB had assets of Dh227bn at the end of March compared with Noor Bank’s Dh51bn in December, according to data compiled by Bloomberg.