UAE firms tie up in three-way mega merger to create $114 billion banking giant

Abu Dhabi Commercial Bank (ADCB), Union National Bank (UNB) and Bank Al Hilal have announced a major three-way merger deal that will create the fifth-largest lender in the Middle East and North Africa with combined assets of $114 billion.

The deal, confirmed at the close of trade on Tuesday, marks the second bank tie-up in Abu Dhabi in recent years and follows a wave of consolidation efforts in the sector.

The new banking group is expected to have around 1 million customers, with a significant share of the UAE market: 15 percent share of total assets, 21 percent share of retail loans, and 16 percent of deposits.

“This is a very exciting transaction that will create a larger, preeminent and resilient banking group. It is a landmark deal for the UAE that will contribute significantly to our national ambitions,” Eissa Mohamed Al Suwaidi, the chairman of ADCB, said in a statement Tuesday.

“The new banking group will carry the ADCB identity and will continue to benefit from strong institutional backing, through the Government of Abu Dhabi’s majority ownership,” a press release from Abu Dhabi Securities Exchange said. Al Hilal Bank will keep its current name and brand, operating as a separate Islamic banking entity within the group.

The transaction, recommended unanimously to shareholders by the ADCB and UNB boards, is subject to regulatory and shareholder approvals to be sought in the coming weeks, according to the release. The deal makes ADCB the third largest bank in the UAE, following First Abu Dhabi Bank and Emirates NBD.

Shares of both listed firms were halted ahead of the announcement.

All three banks have one mutual majority shareholder, the Abu Dhabi Investment Council (ADIC) — which owns more than 60 percent of ADCB and 50 percent of UNB. It owns 100 percent of Bank Al Hilal, which is not publicly listed.

ADIC is part of Mubadala, the investment arm of the Abu Dhabi government, which has assets worth more than $225 billion. Through ADIC, the Abu Dhabi government will own 60.2 percent of the combined bank. Other ADCB shareholders will own 28.0 percent, and other UNB shareholders will own 11.8 percent of the combined bank.