MC EXCLUSIVE RBL Bank set to become Emirates NBD's largest subsidiary outside Dubai

On October 13, Moneycontrol reported that Emirates NBD in advanced talks for acquiring majority stake in RBL Bank.

Deal contours

Upon conclusion of primary capital infusion, Emirates is expected to make an open offer to mop up an additional equity stake in the bank. The open offer, according to sources, could amount to Rs 9,000 crore, representing a stake of around 23 – 24 percent. “Emirates is well-prepared to roll out a voluntary open offer for 10 percent soon as the deal is announced. However it plans to mop up more stake through open offer,” said a banker who didn’t want to be named. With this, Emirates would have infused roughly USD 3 billion into RBL Bank.

The deal is likely to be executed through Emirates NBD Bank PJSC, which has received an in-principal approval from the Reserve Bank of India to convert into a wholly-owned subsidiary (WOS) of Emirates NBD in India. It was earlier operating as a branch of Emirates in the country.

The deal, if it consummates on these lines, will be largest investment by a foreign bank in India's private banking landscape. This would also be the second instance of a global bank showing interest in India so far in 2025, the first being Sumitomo Mitsui Banking Corporation's (SMBC) investment in Yes Bank.

Sources say formal proposal to the RBI will be made by Emirates once the board of RBL Bank approves the deal, though inputs from the regulator have been considered while structuring the transaction.

Emails sent to RBL Bank remained unanswered. However, in a stock exchange communication issued before Moneycontrol's query, the bank said it was on a “growth trajectory”.

"The Bank is on a growth trajectory and routinely explores opportunities which are aimed at enhancing shareholder value. However, such discussions do not warrant a disclosure under Regulation 30 of the Listing Regulations, at this stage. Further, the contents of the aforesaid article are incorrect". This was in response to a query raised by the stock exchanges citing an Economic Times article related to the Emirates NBD deal.

"As a matter of company policy, Emirates NBD declines to comment," said an Emirates NBD official spokesperson when contacted on email

WOS route

It is gathered that acquiring up to 74 percent in RBL Bank would address two critical issues for Emirates NBD. Firstly, having converted its Indian operations from a branch model to a WOS setup, RBL Bank may be merged with its Indian outfit, thereby making the merged entity as subsidiary of the parent bank headquartered in Dubai.

“The Indian operations will fold into the consolidated financials of the holding company. This will position RBL Bank as an important subsidiary for the Emirates outside of Dubai,” said a banker who did not want to be named.

Secondly, by virtue of executing the RBL deal through a WOS structure, issues around stake dilution in future and voting right may have also been taken care of. Regulations permit a foreign entity including foreign banks to acquire up to 74 percent stake in an Indian bank. “To be compliant with FDI norms and RBI regulations, the stake must be maintained at 74 percent in the Indian arm,” said a legal expert aware of the deal contours.

The present banking regulations mandates promoters to reduce their stake to 26 percent over a glide path of 15 years. Similarly, voting rights get capped at 26 percent for promoters. “By opting to acquire RBL through the WOS structure both these issues are taken care of and voting rights whether capped at 26 or not is barely an issue given that Emirates will hold the absolute majority in terms of shareholding,” said the source cited above.

Making of the deal

Deal talks between Emirates and RBL is said to have started about six months back. Sources say after the initial conversations in March, the momentum fizzled out. Around August, both banks are said to have restarted talks. “Until there was clarity on the structure and whether it would acceptable to all regulators, nothing was certain,” said a person who involved in the process, but did not want to be named.  “It was just about a few days back that comfort emerged on the structure proposed by Emirates that RBL will fold into Emirates as its Indian subsidiary,” he added.