Abu Dhabi banks deny merger talks
Three Abu Dhabi banks denied they were in merger talks yesterday, sending their share prices lower as investor hopes of a shake-up in the banking sector were dashed. Abu Dhabi Commercial Bank (ADCB), Union National Bank (UNB) and Abu Dhabi Islamic Bank in separate statements to the bourse each denied they were involved in merger plans.
Shares in the lenders had been suspended earlier yesterday until they responded to a Bloomberg news story published last week, an exchange source told Reuters. The story cited unnamed sources as saying the Abu Dhabi government was weighing a merger between ADCB and UNB, and another between ADIB and Al Hilal Bank. Al Hilal is not listed. Rumours have been circulating in recent months of more possible banking tie-ups after Abu Dhabi’s two largest banks, National Bank of Abu Dhabi (NBAD) and First Gulf Bank (FGB), agreed a merger that is expected to be completed in the first quarter of 2017.
Crowded with more than 50 banks, the UAE banking sector has been squeezed over the past two years by lower government spending and stricter global capital rules. Shares in ADCB, UNB and ADIB jumped last week on renewed speculation about possible mergers. After the release of statements by the banks, trading on their shares resumed. Shares in ADCB closed 2.65 percent lower at 5.88 dirhams, while shares in UNB fell 5.16 percent to 4.23 dirhams. ADIB’s shares closed 0.83 percent lower at 3.57 dirhams.
Abu Dhabi, the oil-rich capital of the United Arab Emirates, has been revamping its economy and pressing ahead with consolidating state-owned entities after two years of low oil prices that have weighed heavily on its revenues. Aside from the NBAD-FGB merger, Abu Dhabi is pushing ahead with the merger of two sovereign funds, Mubadala Development Co and International Petroleum Investment Co (IPIC), and recently announced the merger of three of its universities.
Prior to that, Abu Dhabi National Oil Company said it was merging two of its offshore oil and gas companies.
Meanwhile, shares in Abu Dhabi banks Abu Dhabi Commercial Bank (ADCB) and Abu Dhabi Islamic Bank (ADIB) resumed trading yesterday after being suspended earlier in the day, according to Abu Dhabi Securities Exchange’s website. An exchange source earlier told Reuters that shares in the two banks, along with those of Union National Bank (UNB), had been suspended.
The shares jumped last week on renewed speculation that the Abu Dhabi government might engineer a merger between ADCB and UNB, and another between ADIB and Al Hilal Bank, as part of an efficiency drive.