The two banks announced on Sunday that their boards had agreed to recommend the US$175 billion merger to their shareholders in a move that would create the largest bank in the Middle East by assets.
NBAD shares were the main beneficiaries from the news after it was confirmed that the new entity would retain the NBAD brand.
NBAD shares rose by as much as 6.1 per cent in early trading, eventually closing up 4 per cent at Dh10.05, their highest level since September.
Shares in FGB rose by as much as 4.7 per cent before eventually closing up about 2 per cent at Dh12.85, their highest close in two weeks.
“We didn’t expect much further upside on the two names but as markets are quiet any big news will move stocks,” said Muhammad Shabbir, the head of equities at the Dubai investment bank Rasmala.
“However, there is some upside in the fact that the deal has progressed pretty smoothly so far since the announcement two weeks ago.”
The Abu Dhabi Securities Exchange General Index led gains across the Arabian Gulf's largest bourses on the two stocks' performance, even as volumes remained low ahead of the market's three-day closure from tomorrow for the Eid Al Fitr holiday.
The index closed up 1.1 per cent at 4,549.42, its highest level since late April.
Other banking stocks benefited, with shares in UNB and ADCB rising by 5.8 per cent and 3.8 per cent respectively.
Dubai's headline index finished up 0.7 per cent at 3,336.88, led by gains from DIB and Emaar Properties.
Commercial Bank of Dubai was one of just three laggers on the index, closing down 7.1 per cent at Dh5.20.
Oman’s MSM 30 was the pick of the other gainers across the Gulf, closing up by 0.6 per cent, with the Qatar Exchange edging up by 0.4 per cent.
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