Abu Dhabi Commercial Bank, Union National Bank and Al-Hilal Bank, all controlled by Abu Dhabi government agencies, will merge. Though driven by Abu Dhabi-specific factors, it forms part of a wider trend in the GCC
NBAD – FGB merger will create largest Middle Eastern bank
The directors of National Bank of Abu Dhabi (NBAD) and First Gulf Bank (FGB), both headquartered in Abu Dhabi, agreed on 3 July to merge their two banks.
The new bank will retain the NBAD branding and legal registrations – the merged bank will be called 'National Bank of Abu Dhabi'. Shareholders of NBAD will own 48% of the merged bank's shares and FGB shareholders will hold 52%. The Government of Abu Dhabi's Abu Dhabi Investment Council (ADIC) will hold 33.2% of the merged bank's shares and Mubadala, the Abu Dhabi Government's investment company, will hold 3.7%. The remaining 63.1 will be free float.
The new bank's CEO will be Abd al-Hamid al-Saeed, the current Managing Director of FGB. The current CEOs of the two banks – Alex Thursby for NBAD and André Sayegh for FGB – will remain in place during the transition.
James Burdett, NBAD's Chief Financial Officer will be Chief Financial Officer of the merged bank.
FGB's chairman, Sheikh Tahnoon bin Zayed al-Nayahan, will be the Chairman of the new bank, while the Chairman of NBAD, Mr. Nasser Ahmed al-Soweidi, will be Vice Chairman.
The banks hope that the merger will become effective during the first quarter of 2017.
The new bank will be the biggest in the Middle East when measured by balance sheet figures. It is expected to have equity of $24.5bn and assets of $175bn, according to the investor presentation prepared by the two banks. That contrasts with $16.3bn and $151bn for Qatar National Bank, $15.3bn and $121bn for Saudi Arabia's National Commercial Bank, and $13.6bn and $113bn for Emirates NBD, again according to figures in the investor presentation.
The bank bank is expected to have a market capitalisation of $29.1bn (based on 30 June prices), compared to $32.3bn for Qatar National Bank, $21.3bn for National Commercial Bank and $12.6bn for Emirates NBD.
NBAD is the highest rated bank in the Middle East and the only one to hold AA ratings from all three rating agencies. (AA- from Fitch and S&P and the equivalent, Aa3, from Moody's). FGB is rated A+ by Fitch, A by S&P and A2 by Moody's (equivalent to a Fitch/S&P A). After the merger announcement, Moody's confirmed its rating on NBAD and assigned a positive outlook to that of FGB. Moody's has a negative outlook on NBAD which is directly related to its negative outlook on the Government of Abu Dhabi.
NBAD is licensed to take deposits in the United Kingdom. FGB has a respresentative office in London.
The last big bank merger in the UAE (and in the GCC) was in 2007 when Emirates Bank International and National Bank of Dubai merged to form Emirates NBD. Both of those banks were majority-owned by the Government of Dubai and related entities.
The Investor Presentation on the merger is attached below.
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