The move, which will see the fourth largest lender in the UEA merge with the largest, has taken market analysts by surprise.
Combined assets for the new bank will stand at $44.96 billion with a market value estimated at $12.03 billion.
It is thought that the reason for the merger is to allow the two firms to compete with larger international banks, now that the local market is set to open up in the wake of free market regulations from the World Trade Organisation.
Speaking to Gulf News, Ahmad Humaid Al Tayer, chairman of EBI said: "The objective of this merger is to create a strong entity that will play a major role in the banking industry."
Abdullah Mohammad Saleh, who is currently the chairman of NBC, and Al Tayer will be given the positions of deputy chairman and chairman respectively.