(Recasts to add FGB confirmation)

By Stanley Carvalho

DUBAI, May 28 (Reuters) - Royal Bank of Scotland's RBS.L former chief executive of its Middle East and Africa business is joining Abu Dhabi-based First Gulf Bank FGB.AD (FGB), the Abu Dhabi-based lender said on Tuesday.

Penney, who resigned from RBS in March, will join FGB as head of its expanding wholesale banking division in July, a spokesman for the bank said on Tuesday, confirming an earlier report by Reuters. At RBS Penney was replaced by James Miller.

ID:nL5N0CI0RO

While Western banks have scaled back their operations in the region mainly due to issues back home, local banks, who are flush with liquidity, have been aggressively expanding and increasing their market share in investment banking activities.

Banks such as Qatar National Bank QNBK.QA and Dubai-based Emirates NBD ENBD.DU have also acquired some of the assets of European lenders in the last year to diversify regionally and attracted several senior bankers from global banks.

Last month National Bank of Abu Dhabi NBAD.AD named Alex Thursby, the former chief executive of international and institutional banking at ANZ ANZ.AX , as its chief executive.

ID:nL5N0CQ16L

Meanwhile QInvest, a Doha-based bank, appointed Michael Katounas, previously with Swiss lender Credit Suisse CSGN.VX , to run its investment banking division. ID:nL5N0CT07Q

FGB, the second-largest bank in the United Arab Emirates by market value, expects its loan book to grow by 10 percent in 2013, its chief financial officer said in February. The bank posted a 12 percent increase in first-quarter net profit on the back of higher net interest income. ID:nL6N0DG1LM

RBS sold its retail operations in the region to Abu Dhabi Commercial Bank ADCB.AD in 2010 and withdrew from the mergers and acquisitions business as part of a global plan in 2012. In the region, it focuses mainly on debt products, risk management and transaction banking.

(Writing by Dinesh Nair; Editing by Greg Mahlich)

((dinesh.nair@thomsonreuters.com)(+ 971 4 366 4265)(Reuters Messaging: dinesh.nair.reuters.com@reuters.net))

Keywords: EMIRATES RBS/PENNEY