NBAD and FGB shares soar as Abu Dhabi banks confirm merger talks…
National Bank of Abu Dhabi and First Gulf Bank have held preliminary discussions on a possible merger of the Abu Dhabi-based lenders, two sources with knowledge of the matter said on Thursday.
“There’s a proposal to merge the two to create one champion bank,” one of the sources said.
The second source said a formal announcement on the possible merger could be made as soon as this month.
Both sources spoke on condition of anonymity as the information isn’t public.
Spokespeople for NBAD and FGB, Abu Dhabi’s largest and third-largest banks by assets respectively, didn’t immediately answer calls seeking comment. (Reporting by Stanley Carvalho; Writing by David French; Editing by Andrew Torchia)
In Sunday’s statement, the banks said each lender had formed a working group made up of senior executive management to “review the commercial potential along with any legal and structural aspects of a merger or combination”.
Once complete, the groups will provide their recommendations to their respective boards of directors.
“At this time, there is no certainty that discussions between NBAD and FGB will result in a merger or combination,” the statement added.
Shares in NBAD surged to a three-month high in early Sunday trading, after the bank confirmed news reports it was in merger talks with FGB.
If completed, the merger of the UAE’s two largest banks by market capitalisation would create an entity with assets of around $170 billion, surpassing Qatar National Bank to become the largest bank in the Middle East.
“NBAD and FGB have commenced discussions regarding the possibility of a merger of the two banks or a combination of the two businesses,” the bank said in a statement on the Abu Dhabi stock market, confirming news reports from Thursday.
NBAD shares opened up 14 per cent at Dh9.10, while shares in FGB opened up 7.66 per cent at Dh12.65, their highest level in over six weeks.
“Each bank has formed a Working Group made up of senior executive management to review the commercial potential along with any legal and structural aspects of a merger or combination,” the bank continued.
“At this time, there is no certainty that discussions between NBAD and FGB will result in a merger or combination.”
The merger talks come as banks across the Arabian Gulf face tightening liquidity in the wake of lower oil prices, with FGB and NBAD both reporting lower first quarter profits year on year.
Share gains by the two banks saw Abu Dhabi’s headline index trading up more than 3 per cent in the first hour of Sunday trading.