Abu Dhabi in talks to create two banks
Three-way merger in the works
DUBAI: Abu Dhabi’s merger of three statelinked banks is set to create two new lenders, according to people with knowledge of the matter.
Under plans being discussed, Abu Dhabi Commercial Bank PJSC would acquire Union National Bank PJSC to form a conventional lender, the people said, asking not to be identified because the talks are private. The Islamic divisions of ADCB and UNB would merge and then take over privately-held Al Hilal Bank, they said.
The emirate, which combined two of its largest banks last year to create the Middle East’s second-biggest lender, plans to set up a holding company to manage the new entities, which would operate under separate banking licenses, the people said.
UNB rose 2.9% as of 10:38 am in Abu Dhabi, with trading volumes near five times higher than its 30-day average for the period. ADCB fell 0.1% and is set to end a winning streak of five sessions.
Mubadala Investment Co., which holds a 62.5% stake in ADCB and 50% of UNB through Abu Dhabi Investment Council, and ADCB declined to comment.
UNB and Al Hilal Bank didn’t immediately respond to requests for comment. Abu Dhabi Investment Council fully owns Al Hilal Bank.
Consolidation among Abu Dhabi institutions has been picking up following the slump in crude prices.
National Bank of Abu Dhabi and First Gulf Bank merged last year to create First Abu Dhabi Bank PJSC. A tie-up between Mubadala and the Abu Dhabi Investment Council in March created a sovereign wealth fund with about US$220bil of assets.
The United Arab Emirates is home to more than nine million people and has almost 50 banks, including the local units of Citigroup Inc and HSBC Holdings Plc.