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
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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.


China’s car sales decline deepens, road ahead bumpy

Updated 56 min 4 sec ago
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China’s car sales decline deepens, road ahead bumpy

  • ‘Car sales in January continued to decline, and there was no sign of improvement’
  • China has been grappling with slowing economic growth as well as the fallout of trade frictions with the US

SHANGHAI: China’s automobile sales in January tumbled 15.8 percent from a year earlier, the country’s top auto industry association said on Monday, as the world’s largest auto market hits the skids with the slump in sales extending to the seventh month.
China’s Association of Automobile Manufacturers (CAAM) said in an emailed statement to Reuters that sales dropped to 2.37 million vehicles last month. This follows a 13 percent drop in December and a 14 percent fall in November.
“Car sales in January continued to decline, and there was no sign of improvement. We estimate that February wholesales will also drop sharply” said Xu Haidong, CAAM assistant secretary general.
“The reason for the sales drop is still the slowing overall economy, and consumption decline in small and medium-sized cities” Xu said.
China has been grappling with slowing economic growth as well as the fallout of trade frictions with the United States, forces which contributed to its auto market contracting for the first time in more than two decades last year.
Beijing is now trying to persuade consumers to loosen their purse strings and has pledged to provide subsidies to boost rural sales of some vehicles and purchases of new energy vehicles.
“Q1 sales were good last year, so this year the industry expects to have negative growth in the first quarter” Yale Zhang, head of consultancy AutoForesight, said, but he predicts sales to gradually pick up in the next three quarters.
Industry executives also say China’s car sales in January and February tend to be affected by the Lunar New Year holiday, as consumers hold off on their car purchasing decisions around the festival.
The holiday’s dates change annually but tend to occur in either month. It took place in the first week of February this year.
China’s sales of new energy vehicles, however, continued to buck the trend, totaling 95,700 in January, a year-on-year increase of 140 percent, CAAM said.