Two Dubai-based banks have approved a plan to merge into one unit following negotiations over the past two years and endorsement of the plan by the Central Bank, a newspaper reported on Monday. Dubai Bank (DUB) and Emirates Islamic Bank (EIB) agreed on the landmark merger after talks in Dubai on Sunday by a committee created from the two banks and Dubai-based Emirates NBD (ENBD), one of the largest banks in the Middle East, the Sharjah-based Arabic language daily Alkhaleej said. The committee, comprising representatives from ENBD and those two banks, named Jamal bin Ghalitha CEO of the new unit and appointed other bankers in different positions, the paper said. It quoted what it described as a senior banking source as saying the move will “serve the interests of all” and cut costs, including around Dh350 million in licensing expenses. “The decision to merge the two banks is enforced with immediate effect but the operation will take time,” the source said. DUB and EIB have been locked in merger negotiations since 2010 while they have already presented their merger plan to the Central Bank. Press reports have said that EIB had stipulated that the Dubai government should handle DB’s losses which could be incurred from the difference between the total loss and the new capital. They put the losses at between Dh500-million and Dhtwo billion. Its latest balance sheet showed DB’s assets stood at Dh17.3 billion at the end of 2009 liabilities at Dh15.6 billion. Shareholders equity stood at Dh1.7 billion. In a previous report, sources involved in the talks said the merger plan is intended to create a “massive Islamic banking unit” capable of competing with other banks and matching new economic developments. “This move comes within the new economic vision of the Government of Dubai, aimed at merging small and medium banking units into major institutions capable of competing with other banks,” the semi official daily Alittihad said. It said the idea had been prompted by the success of the merger between Emirates Bank International (EBI) and the National Bank of Dubai (NBD) into what is known now as ENBD, the largest bank in the UAE and one of the world’s biggest 500 banks. EIB, 99.8 per cent controlled by EBI, controlled assets of around Dh25.3 billion at the end of 2010. Its shareholders equity stood at nearly Dh2.84 billion. Dubai’s Government holds around 29.8 per cent of Dubai Bank, which has an authorized capital of nearly Dh3.4bn. It is controlled by the Dubai Banking Group, an affiliate of the government-owned Dubai Holding.