Dubai Islamic Bank (DIB), the United Arab Emirates' largest Sharia-compliant bank, said on Wednesday it had received shareholder approval for the acquisition of unlisted Dubai-based Noor Bank. With the acquisition, DIB will become one of the largest Islamic banks in the world, with total assets worth 275 billion dirhams ($74.9 billion), from 230 billion dirhams as of the end of September.

The deal would "enhance Dubai's position as the capital of Islamic economy by creating the region's most progressive Shari'a banking group," DIB said in a bourse filing. Dubai's sovereign investment group, Investment Corp of Dubai (ICD) is a common shareholder in the two banks. Shareholders gave approval for the acquisition through an increase of DIB's capital from 6.6 billion shares to 7.2 billion shares, with a share swap ratio of 1 new share in DIB for every 5.49 Noor Bank shares, translating into an issuance of about 651 million new DIB shares.

"Completion of this deal will provide opportunities for economic growth, ensuring that the UAE's financial sector remains at the forefront of the Islamic economy," DIB Chairman Mohammed Al Shaibani said in the filing. The deal comes after a wave of mergers in the UAE's banking sector on the back of tougher competition and regulation, coupled with a slowing economy and a slide in house prices.

After two of the UAE's biggest lenders, First Gulf Bank and National Bank of Abu Dhabi, merged in 2017 to become First Abu Dhabi Bank, three more lenders have agreed to combine, led by Abu Dhabi Commercial Bank. Bank consolidation has also picked up in other Gulf countries, as profit margins have been squeezed by lower government and consumer spending in the face of volatile oil prices.