Shareholders of First Gulf Bank (FGB) and National Bank of Abu Dhabi (NBAD) have given the go-ahead to a proposed merger of the two banks.

The merger, announced in June 2016, would lead to the creation of the largest financial institution in the UAE with AED655bn ($178bn) in assets.

The deal will be executed through a share swap, with FGB shareholders receiving 1.254 NBAD shares for each FGB share.

Upon issue of new NBAD shares, about 52% of the combined entity will be owned by shareholders of FGB, while about 48% will be owned by NBAD shareholders. The Government of Abu Dhabi along with government related entities will own a stake of about 37%.

NBAD chairman Nasser Ahmed Alsowaidi said: “The resounding endorsement for the combined bank from both sets of shareholders represents a significant milestone. The new larger bank will be in an excellent position to invest in our people, in technology, in products and services that our increasingly sophisticated client base demands, while capitalising on growth opportunities in the UAE and beyond”.

The deal has already secured the nod of the Central Bank of the UAE. It is expected to be completed in the first quarter of 2017, subject to approval from international regulators and the Securities and Commodities Authority.