Dubai: First Abu Dhabi Bank (FAB), the United Arab Emirates’ biggest lender, said on Thursday it had considered a bid for London-listed Standard Chartered but was no longer doing so.
Bloomberg had earlier reported that FAB had been exploring an offer for Standard Chartered as part of a plan aimed at building an emerging markets bank, driving StanChart shares up as much as 20 per cent.
The shares pared the gains to trade up 7 per cent at 1451 GMT following FAB’s statement that it was no longer pursuing a potential deal.
The Abu Dhabi lender said it had been in “the very early stages of evaluating a possible offer” for the emerging markets-focused bank.
Standard Chartered declined to comment on Thursday.
“Given StanChart has traded at relatively undemanding multiples for some time, as well as the fact that it has the benefit of a material surplus capital position, it is not surprising that it is seen as a takeover target,” said John Cronin, analyst at Goodbody.
Periodic rumours
StanChart, which operates in 59 markets worldwide and has around 85,000 staff, has struggled in recent years to increase its revenue after CEO Bill Winters spent the early part of his tenure repairing its balance sheet and slashing thousands of jobs.
The bank in October said rising interest rates should boost its income, allowing it to increase its revenue targets despite the weakening global economy.
StanChart has been the subject of periodic takeover rumours in media reports over the last decade, with Barclays and JPMorgan among potential suitors named in such stories, although no deal has ever come to pass.
Standard Chartered “is a bank that, while domiciled in the UK, is primarily focused on Asian, African and Middle Eastern markets,” said Stuart Cole, head macro economist at Equiti Capital.
“Given the pessimistic outlooks for the UK, US and EU at the moment, a take-over would give the buyer instant access to these largely developing and emerging markets and could therefore be seen as a good move strategically,” Cole said.
The Gulf region is witnessing an economic boom fuelled by higher oil prices, with sovereign wealth funds and banks on the hunt for deals amid a weakened global outlook.
Saudi National Bank in October announced it was investing up to $1.5 billion in Credit Suisse, representing a stake of up to 9.9 per cent.
FAB was created via a merger between National Bank of Abu Dhabi and First Gulf Bank in 2016. FAB has spent the last few years realising the fruits of that merger and revamping its branches with the new brand. The lender sources around half its deposits from the Abu Dhabi government and reported total assets of Dh1.15 trillion ($313.1 billion) as of end-September 2022.
