Abu Dhabi rallies on bank merger speculation; Saudi, Egypt rebound MIDEAST STOCK MARKETS
DUBAI: Abu Dhabi bank shares surged yesterday because of renewed speculation that the government might merge more banks as part of an efficiency drive, while other regional markets rebounded, encouraged by strong global bourses and oil prices. The Abu Dhabi index jumped 2.6 percent, its largest single-day gain since June, but trading volume continued to decline from a seven-month peak hit earlier this month.
Quoting unnamed sources, Bloomberg reported Abu Dhabi was considering more financial sector mergers after First Gulf Bank and National Bank of Abu Dhabi announced earlier this year that they planned to merge in the first quarter next year. FGB shares closed 2.6 percent higher and NBAD shares added 1.5 percent. Union National Bank surged 12.3 percent and Abu Dhabi Commercial Bank jumped 5.8 percent on speculation they might form the next merger. Officials at the banks and in the government were not available to comment, though several bankers familiar with the industry told Reuters that formal talks were not under way and the idea of any merger was still in very preliminary stages.
A UNB-ADCB merger would create the United Arab Emirates’ third biggest bank and “offer a better footing for ADCB to compete with the bigger players as underwriting capacity increases significantly,” Arqaam Capital said in a note. Abu Dhabi Islamic Bank climbed 4.7 percent after Bloomberg said it could be merged with Al Hilal Bank. Bank officials could not be reached for comment and Bloomberg said it was possible that none of the potential mergers would proceed. Blue chips led Dubai’s main stock index 2.1 percent higher with Emaar Properties gaining 2.8 percent and Dubai Islamic Bank adding 2.4 percent.
Saudi Arabia’s index rebounded 2.4 percent to 6,648 points, 55 points below technical resistance on its July peak. Ninety-five percent of traded shares advanced. All but one petrochemical producer rose with Saudi Basic Industries adding 2.1 percent as Brent oil futures traded over $46 a barrel.