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Mega bank merger to create a3rd largest bank in UAE and 5th largest in MENA region

The Abu Dhabi Commercial Bank (ADCB), Union National Bank (UNB) and Bank Al Hilal have announced a three-way merger deal, making ADCB the 3rd largest bank in the United Arab Emirates (UAE) and 5th largest in Middle East and North Africa (MENA) region, with combined assets of U.S. $ 114 billion.

In a first, ADCB will take over the UNB and the combined entity would then acquire Bank Al Hilal. The new banking entity will carry the ADCB identity and will benefit from strong institutional backing, through the Government of Abu Dhabi’s majority ownership. However, Bank Al Hilal will retain its current name and brand, operating as distinct Islamic banking entity within the group.

The move is a part of consolidation of financial services in the UAE. The transaction has been recommended unanimously to shareholders by the Boards of ADCB and UNB and is subject to regulatory and shareholder approvals. The banks will continue to operate independently until the merger takes place.

If approved, ADCB will issue 0.5966 shares for every UNB share. The ratio implies a premium of 0.6% to UNB shareholders over the closing price of January 28, 2019. After merging with UNB, the ADCB would buy bank Al Hilal for 1 billion UAE Dirhams through issue of post-merger shares to Abu Dhabi Investment Council, a sovereign fund.

Speaking on the occasion, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the UAE’s Armed Forces – Sheikh Mohamed bin Zayed said, “The merger of Abu Dhabi Commercial Bank, Union National Bank and Al Hilal bank 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. 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.”

The Chairman of ADCB – Eissa Mohamed Al Suwaidi said, “This is a very exciting transaction that will create a larger, preeminent and resilient banking group. It is a landmark deal for the UAE that will contribute significantly to our national ambitions.”

Post the 3-way merger, ADCB will have a customer base of 1 million customers and will have 15% share of total assets in UAE, 21% of total retail loans and 16% of total deposits.

For the records, the Abu Dhabi Investment Council (ADIC) – part of Mubadala, the investment arm of the Abu Dhabi Government – is also the mutual majority shareholder in all these 3 banks holding 60% stake in ADCB, 50% in UNB and 100% in Bank Al Hilal.

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