ADCB, UNB, Al Hilal merge, creating UAE’s third largest bank

Dubai: Abu Dhabi Commercial Bank (ADCB), Union National Bank (UNB), and Al Hilal Bank merged on Wednesday to create the UAE’s third largest bank with Dh423 billion in assets.

The transaction saw ADCB and UNB merge together, and then acquire Al Hilal. The new entity will retain the name ADCB and will trade on the Abu Dhabi bourse under that ticker. UNB was, as a result, delisted off the bourse and dissolved as a legal entity.

Al Hilal Bank will, meanwhile, retain its existing identity and continue to operate as a separate Islamic bank within the ADCB Group. It will focus on Sharia-compliant retail banking services.

In a statement, ADCB said that planning for the integration of the three banks is progressing well, with the process set to accelerate from the second half of 2019.

Alaa Eraiqat, chief executive officer of ADCB Group, said the merger will create a financial entity that is well-placed to make a stronger contribution to the UAE’s economy.

“In today’s financial industry, scale is vital for us to operate successfully and achieve our goal of sustainable, long-term growth,” he said. “This merger creates a resilient banking group with the capacity to invest in our mission to provide excellent service for our customers in our core market, the UAE.”

The three-way merger is the latest in the UAE’s banking sector, which has been seeing a series of mergers for the past two years as the operating environment becomes challenging amid weaker economic growth.

In 2017, First Abu Dhabi Bank was created through a merger of National Bank of Abu Dhabi and First Gulf Bank.

More recently, Dubai Islamic Bank (DIB) said it is considering acquiring Noor Bank, with its board now exploring the possibilities of that deal. DIB has appointed legal advisers to initiate talks with regulators on the potential deal.

In Sharjah, the emirate’s government in April 2019 acquired a majority stake in Invest Bank, with reports suggesting that this move will set the stage for another bank merger. Reuters reported that the government was weighing a merger of Invest Bank with Bank of Sharjah and United Arab Bank.

The mergers — even those that are yet to happen — have already led to strong buying activity on the shares of the banks involved as investors and analysts see better growth prospects in the event of a merger.

With around 50 banks in the UAE, analysts — and banking executives — have described the market as over-crowded, making competition tougher for smaller banks. The successful merger that created FAB has also proved that there are gains in efficiency to be had through such transactions.