DUBAI, Dubai’s government moved to create the Gulf’s largest bank by assets on Thursday by combining Emirates Bank International Ltd and smaller National Bank of Dubai in an $11.3 billion deal.

The enlarged bank, called Emirates NDB PJSC and created at the behest of Dubai’s ruler, will have about a fifth of total assets, loans and deposits in the United Arab Emirates, the world’s sixth-largest oil exporter. The all-share deal, which puts Emirates Bank shareholders in control and its management in the top jobs, was announced in March, but financial details were not disclosed at the time.

Shareholders in Emirates Bank will own 66.3 per cent of the enlarged bank and National Bank will own 33.7 per cent, the pairsaid. The Dubai government, a shareholder in both, will own 56 per cent of the combined group Emirates NDB. Emirates Bank Chairman Ahmed al-Tayer and Chief Executive Rick Pudner will be chairman and CEO of the new bank.

Emirates Bank shareholders will swap their stock for the new bank’s shares on a one-for-one basis at their July 1 closing price of 9.30 dirhams ($2.53), while National Bank shares will be exchanged at 8.84 dirhams, 3.3 per cent below their last trade at a ratio of 0.95 shares in the new bank for every one held. Both stocks have been suspended since July 1.

We thought National Bank shareholders would get more for their shares, said Raj Madha, a senior research analyst withthe Egyptian investment bank EFG-Hermes. The Dubai bourse said trading would resume on Sunday.

The banks said in March they had been asked to merge by Dubai’s ruler Sheikh Mohammed bin Rashid al-Maktoum to form a lender large enough to meet the demands of an economy surging on a tripling of oil prices since 2002.

There is more competition on our own soil from the (global) giants. We are trying to consolidate to compete, National BankChairman Abdullah Saleh told reporters.

Other Gulf lenders, including National Bank of Abu Dhabi and Qatar National Bank have said they are looking for acquisitions to gain the scale needed to finance large infrastructure projects and meet demand for credit. This is a government-directed merger. I wouldn’t be surprised if a similar merger happened in Abu Dhabi, said KartiInamdar, senior credit analyst at Cyprus-based Capital Intelligence.

The two Dubai banks, which first attempted a merger in 1999, will top the market value of National Bank of Abu Dhabi, until now the largest in the United Arab Emirates. They had assets worth $48.7 billion on March 31, surpassing Saudi Arabia’s National Commercial Bank as the Gulf’s largest lender by assets.

The government of Dubai, part of the United Arab Emirates federation, owns 76 per cent of Emirates Bank and 14 per cent of National Bank, Dubai’s fourth largest by market value.

Emirates Bank is the second-largest Dubai lender after Dubai Islamic Bank and ahead of Mashreq bank. The banks will initially operate as separate subsidiaries of Emirates NBD. Within 18 to 24 months, the banks will be fully integrated, Pudner told reporters.

This is a true merger, it is a merger of equals, Pudner said, pointing out that the board of the new bank would have six members from each lender, including National Bank’s Chief Executive Douglas Dowie.

The integration will save 151 million dirhams a year in costs by 2010, mainly in areas such as retail banking, Pudner said. The savings were higher than the 90 million dirhams EFG-Hermes had estimated, Madha said. Shareholders of both lenders must approve the merger plan before it takes effect.