The Daily Star (Lebanon)

Abu Dhabi in talks to form two banks in three-way merger

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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 AlHilal Bank, they said.

The emirate, which combined two of its largest banks last year to create the Middle East’s secondbigg­est lender, plans to set up a holding company to manage the new entities, which would operate under separate banking licenses, the people said.

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 $220 billion of assets.

“While three-way mergers are generally complicate­d to execute, such a scenario possibly irons out the formalitie­s in a properly coerced manner, and enables a shorter completion time,” said Aarthi Chandrasek­aran, vice president at Shuaa Capital in Dubai. “The would-be merged entity of ADCB and UNB will possibly be required to shore up the capital of the new Islamic bank.”

UNB rose 2.9 percent as of 11:57 a.m. in Abu Dhabi, with trading volumes near three times higher than its 30-day average for the period. ADCB fell 1.7 percent and is set to end a winning streak of five sessions.

The United Arab Emirates is home to more than 9 million people and has almost 50 banks, including the local units of Citigroup Inc. and HSBC Holdings PLC.

Mubadala Investment Co., which holds a 62.5 percent stake in ADCB and 50 percent of UNB through Abu Dhabi Investment Council, ADCB and UNB declined to comment. Al-Hilal Bank didn’t immediatel­y respond to requests for comment. Abu Dhabi Investment Council fully owns Al-Hilal Bank. – Bloomberg News

 ??  ?? The Islamic divisions of ADCB and UNB would merge and then take over privately-held Al-Hilal Bank
The Islamic divisions of ADCB and UNB would merge and then take over privately-held Al-Hilal Bank

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