Abu Dhabi - Mubasher: Abu Dhabi Commercial Bank (ADCB), Union National Bank (UNB), and privately-owned Al Hilal Bank are on the verge of completing merger talks to create two new lenders, according to sources familiar with the matter.

When discussions completed, the Abu Dhabi exchange-listed ADCB would take over UNB to form a conventional lender, while their Islamic divisions would consolidate and then acquire Al Hilal Bank, the sources told Bloomberg on Thursday.

The UAE’s capital and biggest sheikhdom is looking to establish a holding firm to manage the new entities that would operate under separate banking licences, the people said.

In September, ADCB and UNB, which have a market value of around $10 billion and $2.9 billion, respectively, started talks to merge with Al Hilal Bank.

In a bid to overcome the slippage of global oil prices, Abu Dhabi has stepped up consolidation among its state-run institutions.

In 2017, National Bank of Abu Dhabi and First Gulf Bank, the oil-rich emirate’s two largest banks, finalised a merger to create First Abu Dhabi Bank (FDB).

In the same vein, Mubadala Investment Company and the Abu Dhabi Investment Council created a sovereign wealth fund in March 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,” Aarthi Chandrasekaran, vice president at Shuaa Capital in Dubai, told Bloomberg News.

It is worth noting that Mubadala Investment Co. owns a 62.5% stake in ADCB and 50% of UNB through Abu Dhabi Investment Council.

“The would-be merged entity of ADCB and UNB will possibly be required to shore up the capital of the new Islamic bank,” Chandrasekaran added.