Abu Dhabi: Abu Dhabi Commercial Bank (ADCB) Saturday announced the legal transfer of the retail banking and small and medium enterprise (SME) business of RBS in the UAE to ADCB.
"The agreement was signed by ADCB and RBS on June 16, 2010, and the the Central Bank approval for the same was received about a month back. Meticulous planning and effective implementation enabled ADCB to complete several tasks that required to be completed prior to the legal cut-over in a record 100 days and the transition was seamless," ADCB said in a statement.
Expensive one
ADCB, with a total capital ratio of 17.5 per cent as of March 31, 2010, financed the acquisition from internal cash resources.
The total cash consideration was equal to the net asset value of the UAE RBS retail banking business at completion, plus $46 million. On December 31, 2009, the net assets of the business were approximately $54 million. For ADCB, this amounted to approximately 1.59 multiples of book value.
A banking sector analyst familiar with the developments told Gulf News that the deal with RBS is an expensive one for ADCB.
"ADCB cannot expect near-term gains from this deal, which was about 1.8 times the net asset value. They will first have to clean up the books of RBS' customer base," said the Dubai-based analyst, speaking on condition of anonymity.
ADCB's shares rose 0.4 per cent on Thursday, closing at Dh2.45 on a mildly bullish Abu Dhabi Securities Exchange.
Arup Mukhopadhyay, Head of Consumer Banking at ADCB, said that RBS's retail business in the UAE is an ideal strategic fit for the consumer banking business of ADCB, and adds significantly to the two strategic growth engines of ADCB's consumer banking franchise — credit cards and wealth management.
"The successful completion of this acquisition has resulted in a perfect platform for building a consumer banking powerhouse in the UAE," he added.
Key strategy
The acquisition doubles ADCB's credit card business significantly by enhancing its market share as well as adding over 250,000 new retail customers to the bank. Following the completion of the acquisition, ADCB has become one of the top three credit card players in the country.
Ala'a Eraiqat, Chief Executive Officer of ADCB, said the acquisition was undertaken "in line with our key strategic objectives of strengthening our core business and market position in the UAE and I am confident it will deliver long-term value to all ADCB stakeholders."
