Can a Foreign Investor Acquire a Bank in Dubai? The Ultimate Guide

Dubai has emerged as a leading global financial hub, attracting significant foreign investment across various sectors—including banking and finance. However, acquiring a bank is one of the most complex types of investments due to strict regulatory oversight and national security considerations.

So, can a foreign investor acquire a bank in Dubai? The short answer is: Yes—but with conditions. This guide will walk you through the rules, procedures, and key factors that determine how and under what circumstances such acquisitions are possible.

Overview of the UAE Banking Sector

The United Arab Emirates (UAE) has a well-developed and highly regulated banking system. The UAE Central Bank oversees all banking activities, ensuring financial stability, consumer protection, and compliance with international standards.

There are two main categories of banks operating in the UAE:

1. National Banks : Locally incorporated and majority-owned by UAE nationals or entities controlled by them.
2. Foreign Bank Branches/Representative Offices : Operated by international banks under specific licenses.

Additionally, offshore banks operate from financial free zones like DIFC (Dubai International Financial Centre), offering services primarily to non-residents.

Regulatory Framework for Foreign Ownership of Banks

Under UAE law, foreign ownership of onshore banks is limited , but not entirely prohibited. Here's a breakdown of the current regulations:

1. Onshore Banks (Mainland UAE)

• Historically, UAE banking laws required that at least 51% of shares in a local bank be owned by UAE nationals .
• However, following recent economic reforms introduced in 2021 and updated in 2024, 100% foreign ownership is now permitted in certain sectors —but not universally applied to banks .
• To acquire a stake exceeding 10% in an onshore bank, Central Bank of UAE approval is mandatory.
• Any acquisition involving a change in control must also go through a rigorous vetting process to ensure financial soundness, integrity, and alignment with national interests.

2. Offshore Banks (e.g., DIFC, RAK Bank, ADGM)

• Offshore banks registered in financial free zones like DIFC or Abu Dhabi Global Market (ADGM) may allow greater foreign ownership , including full foreign control.
• These banks typically serve international clients and operate under separate regulatory frameworks.
• Foreign investors looking to establish or acquire a bank in Dubai may find offshore banking structures more flexible.

3. Mergers and Acquisitions (M&A)

• Foreign banks can acquire existing banks or establish new subsidiaries through M&A deals, provided they obtain the necessary approvals from:
  • Central Bank of UAE
  • Securities and Commodities Authority (SCA) (if applicable)
  • Free zone regulators (for offshore entities)