Reuters: Emirates NBD, the largest bank in the United Arab Emirates by assets, will take over struggling government-controlled Islamic lender Dubai Bank under orders from Dubai’s ruler.
Dubai’s Government, which also holds a 55.6 per cent stake in Emirates NBD, has been working to support state-linked institutions saddled with debt since the burst of the global asset bubble hit the Gulf emirate two years ago.
Dubai Bank had been under scrutiny well before Europe’s latest wave of sovereign and banking debt troubles flared up again this year.
Dubai Bank and Emirates NBD, as well as other key financial and real estate institutions, are controlled through direct or indirect stakes held by Dubai’s Government. Dubai Bank was owned by the private holding company of the ruler of Dubai and taken over by the government in May.
When the emirate took control of Dubai Bank it injected an unspecified amount of capital and said its takeover would protect depositors’ interests. Customers deposits stood at 14.9 billion dirhams at the end of 2009.
Dubai Bank has not reported figures since 2009, when it had total assets of 17.4 billion dirhams ($4.74 billion) against total liabilities of 15.7 billion dirhams. It made a 2009 loss of 290.6 million dirhams.
Dubai Bank was previously wholly owned by Dubai Banking Group, which itself is 70 per cent-owned by Dubai Holding, the investment group owned by Dubai’s ruler, Sheikh Mohammed bin Rashid al-Maktoum.
The remaining 30 per cent of Dubai Banking Group was owned by developer Emaar Properties, which took a writedown of 172 million dirhams on the investment in May.
Emirates NBD itself was created in 2007 by the merger of two local banks ordered by Dubai’s ruler and had total assets of 300.3 billion dirhams versus total liabilities of 266.3 billion dirhams as of 31 March, according to Reuters data.
Dubai already also has stakes in six commercial banks in the UAE, including Emirates NBD.