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ADCB appoints Barclays as merger advisor

ADCB appoints Barclays as merger advisor
ADCB appoints Barclays as merger advisor
ADCB
ADCB
1.45% 8.40 0.12
UNB
UNB
0.00% 5.90 0.00

Abu Dhabi – Mubasher: Abu Dhabi Commercial Bank (ADCB) appointed Barclays as an advisor to its potential merger with two other UAE-based banks, sources told Reuters on Wednesday.

The merger involves Union National Bank (UNB) and privately-owned Al Hilal Bank.

In September, talks of the potential merger emerged, with ADCB saying it would take over UNB to create a conventional bank, while the two banks’ Islamic divisions would merge and acquire Al Hilal Bank.

The emirate of Abu Dhabi is also looking to establish a holding firm to manage the new entities which would operate under separate banking licences, sources told Bloomberg at the time.

In October, the UAE’s central bank governor Mubarak Rashed Al Mansoori said that the merger between the three lenders was still at an early stage, but said that if completed the transaction could create a lender with $113 billion in assets.

With such an asset base, the lender would be the third largest in the UAE after First Abu Dhabi Bank (FAB) and Emirates NBD.

FAB was created in 2017 following a merger between the National Bank of Abu Dhabi and First Gulf Bank.

It is worth noting that the emirate of Sharjah is reportedly considering a similar merger involving three lenders based in the emirate, namely: Bank of Sharjah (BOS), Invest Bank, and United Arab Bank (UAB).

Moody’s Investor Service recently said that the three-bank merger would be credit positive.

"The merger of ADCB, UNB, and Al Hilal Bank would contribute to consolidation of the over-banked UAE banking sector, which will increase banks’ pricing power, reduce pressure on their funding cost and increase their ability to meet sizeable investments," Moody's said.

ADCB last reported a 5.6% year-on-year profit growth to AED 1.151 billion ($313 million) between July and September, from AED 1.09 billion ($296 million), while for the first nine months of 2018, the bank logged AED 3.483 billion in net profits, up 9% from AED 3.205 billion in the same period of 2017.