The Gulf's largest bank will emerge from the combination of the National Bank of Dubai and Emirates Bank International. The two institutions announced yesterday that terms for a merger had been agreed and that trading in the shares of the banks has ceased. 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. Ahmad Humaid Al Tayer, chairman of EBI, said: "The objective of this merger is to create a strong entity that will play a major role in the banking industry." The deal will create the biggest banking institution in the Gulf in terms of deposits, profit, assets and market capitalisation. The combined entity will be worth 41.3 billion dirhams ($11.2bil), overtaking Saudi Arabia's National Commercial Bank as the region's biggest bank. The UAE's largest lender currently is the National Bank of Abu Dhabi. Mr Al Tayer will be board chairman of the new bank and Abdullah Mohammad Saleh, the chairman of NBD, will become deputy chairman. Mr Saleh said the merger is aimed at enabling the UAE to compete in global markets and face challenges such as free trade agreements with the US, as well as meeting demands of the World Trade Organisation.