Abu Dhabi banks deny merger talks

Kuwait Times - - BUSINESS -

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.

Newspapers in English

Newspapers from Kuwait

© PressReader. All rights reserved.