Updated: According to a Tuesday media report, FAB and ADCB are “close to finalizing” their plans to merge the two entities. The banks said the news was “unsubstantiated” and “false”.
“Abu Dhabi Commercial Bank categorically denies the false content of the article regarding the potential merger,” ADCB stated, adding that it has been “successfully implementing” a five-year strategy.
[The bank] has not entered into any merger discussions with ADCB, FAB said in a separate statement.
Previous reports indicate that The First Abu Dhabi Bank and the UAE’s Abu Dhabi Commercial Bank are close to finalizing a potential merger that would largely aim at a synergy of operations in the capital’s two largest banks. in one moment in which the UAE banking sector is experiencing fierce competition and an excess of banks operating in the market.
According to sources Al-Arabiya.net, the potential deal is in preparation for months and, if an agreement is reached, it could be announced at the latest in the second or third quarter of quest year, after obtaining the approval of regulatory authorities.
The merger, if completed, would create the largest banking entity in the region in terms of business. This indicates that the potential new entity will have assets in excess of $350 billion, which puts it ahead of the Qatar National Bank, which currently is at top of the list.
The two banks are listed on the capital market, Abu Dhabi and their combined market value are more than AED320 billion, according to data from the Abu Dhabi money market at the close of trading on Monday.
While the potential merger process is progressing, the potential agreement will result in the complete termination of the” Abu Dhabi Commercial “entity after having merged its activities with First Abu Dhabi Bank, merging the activities and unifying the rules of business of the two banks.
First Abu Dhabi Bank was formed mainly after the merger of First Gulf Bank and National Bank of Abu Dhabi in 2017, while the Abu Dhabi Commercial Bank group was formed in 2020, through a merger also with Union National Bank, and the acquisition of the Al Hilal bank.
“We will definitely see a share swap in the deal and it is currently under consideration . I think the swap factor will not leave the area of 2-3 ADCB shares for each FAB share,” the source said.
The operation, upon its completion, is consistent with the current merger and synergy policy that the UAE banking sector has been witnessing in recent times to cope with the repercussions of the pandemic and fierce competition.
According to a banking source “The deal looks like in somehow logical if we look at the strength of the nascent entity, as well as the facts on the ground, given the number of large banks operating on the market, given the population.”
Official data from UAE Central indicate that the number of banks operating in the market, both local and foreign, is around 59, which ranks the UAE as one of the largest countries in the world in terms of bank coverage, given the population.
“The synergy in operations and expenditure control in general is a government trend in the UAE, including institutions in which government-affiliated companies have controlling stakes,” added the source.
Mubadala, the investment arm of the Abu Dhabi sovereign wealth fund, is one of the largest shareholders of the two banks, with a controlling stake of around 60% in both.
However, the possible merger process could include the reduction of thousands of jobs at Abu Dhabi Commercial, a banking source reported.
“It is normal to see job cuts after the synergy process between the two banks, given the large size of the workforce in the two banks,” the source said.
Abu Dhabi Commercial Bank has around 9,000 employees, while First Abu Dhabi Bank’s number of employees is around 5,000, according to the site web bank officer.
Some of those who recently lost their jobs at Abu Dhabi Commercial Bank believe their departure was largely linked to the potential deal.
A former analyst with the bank’s credit and risk department, who lost his job about two months ago, said he reported the reasons for his job loss, which included a broader plan to cut jobs. in the bank before a possible merger agreement.
The analyst, who declined to be identified, added that there is talk of canceling at least 6,000 jobs in the group. in multiple stages, to be completed with the completion of the casting process.
It was not immediately possible for the sources to confirm the validity of the job loss plan referred to, while a spokesman for the bank did not respond to comment on the matter.
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