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The UAE’s banks urged to merge

by Executive Staff

Six of the United Arab Emirate’s banks control 60 percent of the banking market, according to Emirates Business 24|7 analysis, suggesting that mergers and acquisitions are needed in the banking industry. Based on figures from the end of 2009, of the UAE’s more than 50 banks, 60 percent of business is conducted by Emirates NBD, National Bank of Abu Dhabi (NBAD), Abu Dhabi Commercial Bank, First Gulf Bank, Dubai Islamic Bank and Mashreq. The same six banks also held 60.34 percent of deposits at the end of last year, compared to 58.33 percent at end-2008 and 64 percent of lending at year-end 2009, down from 68 percent. The decrease in lending, however, can be attributed to the industry-wide slowdown and not the spreading of loans throughout the industry. Furthermore, Emirates NBD and NBAD control 30 percent of all banking business in the UAE, prompting Adnan Ahmed Yousif, chairman of the Union of Arab Banks, to say, “The UAE should encourage bank mergers. Since the UAE does not have a tax system for local banks, capital requirement could be the ideal tool through which banks can be encouraged to merge.”

Mergers prescribed for the UAE
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