Dubai: Abu Dhabi Commercial Bank (ADCB) and Union National Bank (UNB) both confirmed on Tuesday that they are in early talks about a potential merger.

In separate statements, ADCB and UNB said they have commenced “exploratory talks” regarding a possible merger between the two, but said the talks are at “a very preliminary stage” and may not result in a deal.

The statements come after a Bloomberg News report that said Abu Dhabi is working to merge ADCB, UNB, as well as private bank Al Hilal into one bank that would have assets worth $110 billion.

ADCB, UNB shares jumped more than 14% on merger news, sending the ADX index up by 1.2% to trade above 5,000 by mid-morning on Tuesday. 

Statement on potential merger or combination

ADCB said on Tuesday it has had separate discussions on a merger with shareholders of Al Hilal bank, without confirming that all three entities might merge. UNB, meanwhile, did not say it held any talks with Al Hilal.

“Union National Bank announces the commencement of exploratory talks regarding a potential merger with Abu Dhabi Commercial Bank. Discussions are at a very preliminary stage and may not result in a transaction,” UNB’s statement said.

Both ADCB and UNB said they would update the market if and when there are “any material developments” on the issue.

A merger between the banks would follow a similar one between the National Bank of Abu Dhabi and First Gulf Bank, which merged in April 2017 to create First Abu Dhabi Bank. The merger created one the Middle East’s largest banks by assets, with Dh691.6 billion worth of assets as of June 30, 2018.

It would also follow a wave of consolidation announced in other sectors last year amid slower economic growth as a result of lower oil prices. In 2017, Mubadala Development Company and the International Petroleum Investment Company merged to create Mubadala Invesment company, whose total assets are worth some $125 billion, making the company one of the largest sovereign wealth funds in the world.