The bank mergers are said to be part of a broader strategic shift on the part of Abu Dhabi’s rulers to prepare for a future where oil’s global dominance is set to wane.
Abu Dhabi’s merger of three state-linked banks is set to create two new lenders, according to people with knowledge of the matter.
Under plans being discussed, Abu Dhabi Commercial Bank (ADCB) would acquire Union National Bank (UNB) to form a conventional lender, the people said, asking not to be identified because the talks are private. The Islamic divisions of ADCB and UNB would merge and then take over privately-held Al Hilal Bank.
The emirate, which combined two of its largest banks last year to create the Middle East’s second-biggest lender, plans to set up a holding company to manage the new entities, which would operate under separate banking licences, the people said.
UNB rose 2.9 per cent as of 10:38 a.m. in Abu Dhabi, with trading volumes near five times higher than its 30-day average for the period. ADCB fell 0.1 per cent and is set to end a winning streak of five sessions.
Mubadala Investment Company, which holds a 62.5 per cent stake in ADCB and 50 per cent of UNB through Abu Dhabi Investment Council, and ADCB declined to comment. UNB and Al Hilal Bank did not immediately respond to requests for comment. Abu Dhabi Investment Council fully owns Al Hilal Bank.
Consolidation among Abu Dhabi institutions has been picking up following the slump in crude prices. National Bank of Abu Dhabi and First Gulf Bank merged last year to create First Abu Dhabi Bank. A tie-up between Mubadala and the Abu Dhabi Investment Council in March created a sovereign wealth fund with about $220 billion of assets.
The UAE is home to more than nine million people and has almost 50 banks, including the local units of Citigroup and HSBC Holdings.