Abu Dhabi – Mubasher: Abu Dhabi Commercial Bank (ADCB) on Tuesday announced the UAE is to see a powerful new banking group after its merger with Union National Bank (UNB) and together acquiring Al Hilal Bank.

Al Hilal Bank, which is 100% owned by the Government of Abu Dhabi, through the Abu Dhabi Investment Council (ADIC), will be acquired for a consideration of approximately AED 1 billion by issuing a mandatory convertible note for up to 117,647,058 post-merger ADCB shares to ADIC after the completion of the statutory merger.

The transaction is subject to regulatory and shareholder approvals to be sought in the coming few weeks, according to Abu Dhabi-listed ADCB said in a statement.

The new banking entity will carry the ADCB identity and will continue to benefit from strong institutional backing, through the government of Abu Dhabi’s majority ownership.

Moreover, Al Hilal Bank will maintain its existing name and brand and operate as a separate Islamic banking entity within the group, the statement added.

The merger deal will make ADCB reinforce its position as the third largest financial institution in the UAE and become the fifth largest lender in the GCC.

With an expected one million customers, the new entity’s total assets will record around AED 420 billion ($114 billion), the statement showed.

“The transaction will create a robust platform to grow the bank’s consumer and wholesale businesses in both conventional and Islamic banking,” it added.

On the other hand, ADCB will issue 0.5966 ADCB shares for every UNB share, corresponding to a total of 1,641,546,697 new shares issued to UNB shareholders.

On the effective date of the merger, UNB shares will be delisted from the Abu Dhabi Securities Exchange (ADX).

Following the transaction, the government of Abu Dhabi, through the Abu Dhabi Investment Council, will own 60.2% of the combined bank.

Meanwhile, other ADCB shareholders will own 28.0%, and other UNB shareholders will own 11.8% of the combined bank.

“This transaction is a confident and transformational move that creates a new, robust and agile financial institution, built on a strong track record in conventional and Islamic banking,” Ala’a Eraiqa, CEO of ADCB, commented.

It is worth noting that the combined bank will benefit from a strong balance sheet, solid financial metrics, and favourable access to capital markets.

"We bless this step that will bolster the business environment, guarantee its sustainability, support development projects and create investment opportunities in the vital sectors according to the best international standards," Crown Prince of Abu Dhabi and Commander of the UAE's Armed Forces Sheikh Mohamed bin Zayed said on Twitter.

He added that the merger of the three banks is in line with the economic vision of the UAE and creates a strong banking group that has human capital and financial capabilities that will bolster the competitiveness of the economy and its future outlook. 

In November, the three banks announced that they were on the verge of completing merger talks to create two new lenders.