National Bank of Abu Dhabi (NBAD) and First Gulf Bank (FGB) have received approval from their boards for their merger that will create the largest bank in the Middle East and North Africa (MENA) with $175bn in assets.

The combined entity will have a market capitalisation of nearly $29.1bn. It will operate in 19 countries, and be well positioned in major financial centres such as Singapore, Hong Kong, Geneva, London and Washington, DC.

The merger will be carried out through a share swap, with shareholders of FGB will receive 1.254 NBAD shares for each share they hold.

Following the issue of the new NBAD shares, shareholders of FGB will hold about 52% of the merged entity, while NBAD shareholders will own about 48%. The government of Abu Dhabi and related entities will hold about 37% stake.

Both the lenders will continue to operate independently till the completion of the merger in the first quarter of 2017. FGB’s shares would be delisted from the Abu Dhabi Securities Exchange following the completion of the deal.

The combined company will retain the NBAD brand. Its board will include four nominated directors of FGB and four nominated directors of NBAD.

"The proposed merger will create a bank with the financial strength, expertise, and global network to support the UAE’s economic ambitions at home and drive the country’s growing international business relationships," the Abu Dhabi-based lenders said in a joint statement.

The deal, which was confirmed last month, is subject to shareholders’ and regulatory approvals.