ADCB and UNB shareholders greenlight mega-merger
The new entity will also include Al Hilal Bank and have a net profit of Dh6.1b
Dubai: Shareholders of Abu Dhabi Commercial Bank (ADCB) and Union National Bank (UNB) have given their approval for a merger of the two banks and then to acquire Al Hilal Bank, creating an entity with Dh6.1 billion in net profit.
At the separate ADCB and UNB annual general meetings on Thursday, shareholders approved the terms of the transaction, under which ADCB will issue convertible bonds to Al Hilal’s shareholders as the acquisition price paid by ADCB for the privately-held bank.
The bonds will be converted into over 117 million new shares in ADCB, increasing the share capital of the bank to up to Dh6.9 billion on conversion of the bonds. ADCB said at the meeting the acquisition of Al Hilal Bank is expected to close in the second quarter, having earlier said that the merger with UNB alone is likely to be effective only by May 1.
At ADCB’s meeting, executives from the bank told shareholders that the merged entity will have Dh423 billion in total assets.
The entity — which will retain the ADCB brand name — will have around one million customers, and on the balance sheet side, Dh285 billion in customer deposits and Dh260 billion in net loans and advances.
Shareholders also approved the appointment of 11 members to the merged entity’s board of directors, each with a term of three years. In terms of capital, shareholders approved the issuance of tier capital instruments with an amount up to $2 billion “for the purpose of strengthening ADCB’s capital adequacy ratio”, the details from the meeting show.
ADCB shareholders and board members agreed the bank will distribute cash dividends equal to 46 per cent of ADCB’s capital, and amounting to Dh2.39 billion.
At UNB’s annual general meeting, shareholders approved the merger and approved terms that will see 0.596 new ADCB shares issued for each UNB share. The merger between the two Abu Dhabi mega-banks will see UNB delisted from the bourse, and its assets and liabilities assumed by ADCB.
A fortnight ago, the chairmen of ADCB and UNB issued a joint letter urging shareholders to vote in favour of the merger, saying the new entity will have increased productivity and contribute to greater profitability.
— With inputs from Fareed Rahman, Senior Reporter