Dubai Islamic Bank

Dubai Islamic Bank has hired HSBC Holdings to advise on its possible acquisition of smaller rival Noor Bank, according to people with knowledge of the matter.

Noor Bank is working with Barclays on the deal, the people said, asking not to be identified because the discussions are private. An acquisition would create a lender with $76 billion in assets.

“Dubai Islamic Bank can see a lot of synergies with an acquisition of Noor,” CEO Adnan Chilwan said last month after Bloomberg reported that the companies had held initial talks.

The Middle East’s financial-services industry is witnessing a wave of consolidation as banks seek ways to improve competitiveness and boost capital amid slowing economic growth. Abu Dhabi has merged three of its banks after combining two of its biggest lenders in 2017. Banks in Saudi Arabia, Kuwait and Bahrain are also holding merger talks.

Dubai Islamic Bank and Noor Bank declined to comment, while HSBC and Barclays didn’t immediately respond to requests for comment.

Investment Corp of Dubai, the emirate’s main state-owned holding company, is the largest shareholder in Dubai Islamic Bank with a 28 percent stake. It’s also one of the biggest investors in Noor Bank, a lender set up in 2008.

Dubai Islamic Bank had assets of AED227 billion at the end of March compared with Noor Bank’s AED51 billion in December, according to data compiled by Bloomberg.