UNB and Al Hilal Bank will now both become ADCB in $114 billion merger Image Credit: Gulf News

Dubai: Shareholders of Union National Bank will be issued new ADCB (Abu Dhabi Commercial Bank) shares on May 1 or the next business day. This will be followed by UNB getting delisted from the Abu Dhabi bourse and the new merged entity trading under the ticker “ADCB”.

This follows the confirmation that the merger is likely to be effective from May 1. The dates will still depend on a range of factors, including the results of the shareholder meetings held by ADCB and UNB, the banks said in a joint circular posted to the Abu Dhabi Securities Exchange website.

The decisions come after boards of both banks agreed to the proposed merger, following which ADCB will acquire Abu Dhabi’s Al Hilal Bank. UNB will also be dissolved, after its assets and liabilities are assumed by ADCB.

A joint letter from the chairmen of ADCB and UNB said the two banks believe the merged entity is “well positioned to provide support for UAE’s economic vision, and to actively participate in the country’s growth and diversification.”

The chairmen urged shareholders to vote in favour of the merger at the upcoming meetings. “The combined bank’s increased productivity and economies of scale will contribute to greater profitability and allow the combined bank to be highly competitive in its offerings to corporate and individual customers, in both conventional and Islamic banking,” the chairmen said in the joint letter.

Shaikh Nahayan Mabarak Al Nahayan, Minister of Tolerance and chairman of UNB; and Eissa Al Suwaidi, chairman of ADCB, added that the merged entity is expected to provide an uplift in earnings per share for shareholders of the three banks. They also expect “double-digit returns on equity”.

The banks in September last announced they had commenced discussions regarding the possibility of a merger. In late January, they said their boards had voted unanimously in favour of the deal, which will create the third largest bank in the UAE.

The merged entity, named ADCB, is expected to own Dh420 billion in assets, and have around one million customers. It will also have 15 per cent of the UAE banking sector’s total assets, 21 per cent of total retail loans, and 16 per cent of deposits, the banks said.

Under the terms of the deal, UNB shareholders will get 0.5966 new ADCB shares for every share held, corresponding to a total of 1.6 billion new ADCB shares being issued.