The Sharjah government is mulling to merge the emirate’s three banks to create a combined entity with $18bn of assets, reported Reuters citing unnamed sources.

The plan, part of the ongoing consolidation of the banking industry in the UAE, involves the merger of Bank of Sharjah, Invest Bank, and United Arab Bank (UAB).

Although the still in early stages, the plan may see Bank of Sharjah, a majority-owned government entity, acquire the other two lenders.

However, Invest Bank and UAB declined to comment on the development. Bank of Sharjah did not respond the news agency’s request for comment.

According to Thomson Reuters data, the Sharjah government is the biggest shareholder of Bank of Sharjah with 17.2% stake.

International Private Group is the largest shareholder of Invest Bank with 15.5% stake.

With a population of nearly nine million, the UAE has around 50 banking institutions.

Earlier this month, it was reported that Abu Dhabi is planning three-way merger of Abu Dhabi Commercial Bank, Union National Bank and Al Hilal Bank.

If successful, the move will create an entity with nearly $110bn in assets.

Last year, two banking units were merged to create First Abu Dhabi Bank.

In the Gulf region, discussion of potential bank mergers gained momentum in the last few years due to fluctuating oil prices which in turn escalated the number of bad loans decreasing profit margins of the banks.