Abu Dhabi Commercial Bank in three-way merger talks with UAE rivals

ADCB, majority owned by the Abu Dhabi government, said it is in early merger talks with UNB and Al Hilal Bank late on Monday. (Courtesy ADCB)
Updated 04 September 2018
0

Abu Dhabi Commercial Bank in three-way merger talks with UAE rivals

ABU DHABI: Shares in Abu Dhabi Commercial Bank and Union National Bank surged on Tuesday after they said they were in three-way merger talks that included Al Hilal Bank in a deal that could form a lender with $113 billion in assets.
Abu Dhabi, the capital of the United Arab Emirates, is reshaping its economy and consolidating state-owned companies to cope with lower oil prices.
Two of Abu Dhabi’s top banks were merged last year to create First Abu Dhabi Bank, with total assets of $175 billion, while two of its big sovereign wealth funds were also combined.
If it goes ahead, a merger of the three could create an entity with $113 billion in assets, according to Thomson Reuters data, and the United Arab Emirates’ third-biggest lender after First Abu Dhabi and Emirates NBD.
ADCB, majority owned by the Abu Dhabi government, said it is in early merger talks with UNB and Al Hilal Bank late on Monday, while UNB, in a disclosure on Tuesday also confirmed talks with ADCB, saying they were “very preliminary.”
ADCB shares shot 12 percent higher, while UNB was up almost 15 percent in late morning trade. Islamic lender Al Hilal is unlisted.
“The UAE has been overbanked for a long time and consolidation has been happening in the banking and investments sector to create bigger entities to compete strongly regionally and globally,” said Tariq Qaqish, managing director, asset management at MenaCorp.
“But mergers could result in job losses, the closure of branches, which might have spillover effects, impacting the real estate or health care sectors.”
Bahrain-based securities firm SICO said the deal is likely to be a share-swap, with both UNB and Al Hilal getting ADCB stock.
While ADCB, the second-largest bank in Abu Dhabi and UNB are both majority government owned, Al Hilal Bank is fully-owned by the Abu Dhabi government.
“Considering the same primary owner, we believe it is fair to assume a relatively smooth transition of this deal, before the regulatory approval stage,” SICO said in a note.
Al Hilal representatives did not respond to calls, while the Abu Dhabi government did not reply to an email.
Consolidation has shaken up banking in other Gulf countries. Bahrain’s Ahli United Bank is in merger talks with Kuwait Finance House, which could be the first cross-border tie-up between Gulf lenders in recent years,
Meanwhile, Saudi British Bank and Alawwal Bank have also agreed a merger to create Saudi Arabia’s third-biggest lender, in a $5 billion deal that marks the first major banking tie-up in the kingdom in two decades.


Full-blown US, China trade war to cost jobs, growth and stability — WTO’s Azevedo

Updated 25 September 2018
0

Full-blown US, China trade war to cost jobs, growth and stability — WTO’s Azevedo

  • ‘A continued escalation of tensions would pose an increased threat to stability, to jobs and to the kind of growth that we are seeing today’
  • ‘There would be no winners from such a scenario and every region would be affected’

BERLIN: A full-blown trade war would have serious effects on global economic growth and there would be no winners of such a scenario, the director-general of the World Trade Organization (WTO), Roberto Azevedo, said on Tuesday.
Speaking at a Berlin industry event against the backdrop of growing trade tensions between China and the US, Azevedo said: “The warning lights are flashing. A continued escalation of tensions would pose an increased threat to stability, to jobs and to the kind of growth that we are seeing today.”
A full-blown global trade war with a breakdown in international trade cooperation would reduce global trade growth by around 70 percent and GDP growth by 1.9 percent, Azevedo said.
“There would be no winners from such a scenario and every region would be affected,” Azevedo said. The European Union itself would have about 1.7 percent taken off its GDP growth, he said, adding: “Clearly, we cannot let this happen.”
Azevedo pointed to several reform proposals that addressed trade-distorting practices and the WTO’s existing mechanisms to resolve trade disputes, adding that members had to agree on which reforms they wanted to focus on.
“Clearly, this informed debate is gaining significant momentum and that is positive,” Azevedo said, adding the G20 summit in Buenos Aires in November would be crucial to agree on the next steps to safeguard the rules-based free trade order.
“Of course, the system can be better, in fact it must be better. But it’s nonetheless vital. So while we work to improve it and ensure that it’s more responsible to evolving economic needs, we must also preserve what we have — and I count on your support to that end,” he said.