Moody's: UAE banks merger may raise ratings

In response to reports of a potential merger involving Emirates Bank International PJSC and National Bank of Dubai PJSC, Moody's Investors Service said it has not taken any rating action because it is too early to assess the outcome of these discussions and the potential impact on the banks' ratings.

In the event that the merger comes to fruition, the merged entity could become the largest bank in the United Arab Emirates. The merged entity would enjoy leading market shares in a number of business lines in the domestic market and particularly in Dubai, the agency said.

Moody's also noted that the common ownership of the two banks could facilitate this merger. The government of Dubai, with a 77% stake in Emirates Bank and a 14% stake in National Bank of Dubai, appears to have been a catalyst for these discussions.

Moody's said it believes that the merged institution could enjoy a significantly enhanced franchise with diversified business lines and this could have positive rating implications. Emirates Bank is currently rated A1/prime-1/C- with stable outlook and National Bank of Dubai is rated A1/prime-1/D+ with stable outlook.

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