Emirates NBD fetches investment worth $245 million from Bank of America

The transaction is worth a 1.51% stake in Dubai’s largest bank.

By Rahul Vaimal, Associate Editor
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Emirates NBD
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North Carolina based Bank of America has acquired 1.51% in Emirates NBD, Dubai’s largest bank.

Sources suggest that the purchase is likely done through market deals. “It is difficult to say whether it was acquired by the American bank for itself or a client. But the high probability is that such deals are generally conducted on behalf of the clients, especially high net worth individuals,” said the sources.

The acquisition has not been reported by both the banks to the Dubai Financial Market because the SCA rule on the sale and purchase of shares in public shareholding companies in the UAE mandates the need to report only if the transaction exceeds 5 percent of total shares available. Once the 5 percent threshold is crossed, any 1 percent increase or decrease in share ownership must be disclosed to the market.

Both Bank of America and Emirates NBD utilise virtual assistants and artificial intelligence. Emirate NBD is the first of its kind in the MENA region. Bank of America has seen a surge in popularity among the customers during the pandemic.

The deal brings a glimmer of hope in these tough times as it indicates that investors are looking at Dubai companies as a good investment opportunity. UAE’s banking sector has, especially, felt the brunt recently with oil prices dropping and the rapid spread of COVID-19.

According to the analysis of Alvarez & Marsal (A&M), the country’s top 10 lenders reported a combined 6.3% quarter-on-quarter drop in interest income in Q1 2020.

Usually, such deals are worked out by foreign banks on behalf of their clients and hence are not considered to be strategic movements by the banks. Both Emirates NBD and Bank of America have declined to offer a comment.