Oil-rich Abu Dhabi is mulling another potential bank merger between three of its banks, which would result in a financial powerhouse with combined assets of $110 billion.
Locally-listed Abu Dhabi Commercial Bank (ADCB) and Union National Bank (UNB) along with privately-held Al Hilal Bank, are exploring a merger between the three entities, creating the UAE’s second largest bank and the fifth largest in the GCC. The potential merger comes as the emirate — home to 6% of the global crude reserves — looks to insulate itself from the low price oil environment.
Last year, two of Abu Dhabi’s biggest banks, National Bank of Abu Dhabi and First Gulf Bank entered into a mega-merger to create First Abu Dhabi Bank (FAB), the largest bank in the country and the second largest in the GCC with $188 billion in assets.
This was followed by the consolidation of two of the emirate’s sovereign wealth funds, Mubadala and Abu Dhabi Investment Council, creating a behemoth with estimated combined assets of $250 billion, making it the world’s eleventh largest sovereign fund.
For the past four years, lower oil prices have pushed lenders across the region to consolidate, which has resulted in a 62% jump in mergers and acquisitions in the Middle East during the first half of 2017, according to a report by McKenzie.
In fact, the aggregate value of all Middle East M&A activity soared from $15.7 billion in H1 2017 to $25.4 billion in the same period this year, with the volume of deals holding steady as last year.
While UAE dominated in the number of M&As, cross-border deals saw a surge in both value and volume over the first half of 2018.
Just days after Saudi British Bank and Alawwal Bank agreed to a $5 billion merger deal to create the Kingdom’s third-largest lender in May, Kuwait Finance House and Bahrain’s Ahli United Bank began talks on a potential merger; if the deal materializes it could create an entity with $92 billion in combined assets.
Re-dessiminated by The Asian Banker from Forbes Middle East