Wave of Gulf bank mergers almost over: S&P Global Ratings

Abu Dhabi Commercial Bank, Union National Bank and Al Hilal Bank combined in a three-way merger on May 1, 2019. (AFP)
Updated 28 May 2019

Wave of Gulf bank mergers almost over: S&P Global Ratings

  • Smaller scale consolidations could still happen in overbanked countries to ‘help improve banks’ performance and financial stability

DUBAI: The Gulf banking sector may experience fewer mergers and acquisitions, with the remaining pool of lenders seeing limited bases – except for economic reasons – for them to consider consolidation deals.

“Most mergers to date have involved banks with common major shareholders,” S&P Global Ratings said in a report. “As such, the pool of banks with similar ownership is smaller, which will mean fewer M&A from now on unless economic reasons force the issue.”

The rating agency however noted that given the overcapacity of some Gulf banking systems, particularly in the UAE and Oman, smaller scale consolidations could still happen to ‘help improve banks’ performance and financial stability.

In the UAE, there are 49 commercial banks serving a population of about 9 million while 20 banks in Oman serve a population of about 4.7 million.

“The presence of a significant number of banks in these two countries means that smaller players typically have to differentiate by focusing on specific segments like Islamic banking, riskier clients rejected by larger lenders, or by competing on price,” S&P Global Ratings said, which could be enhanced by seeking synergies with other lending institutions.

“Any future M&A would require more aggressive moves by management than those seen in the past. The added hurdles of convincing boards and shareholders, who face the possibility of seeing their assets diluted or losing control, means the next wave of deals may take longer to build than the current one,” it added.


Yemen’s Safer oil company resumes pumping to Arabian Sea terminal

Updated 16 October 2019

Yemen’s Safer oil company resumes pumping to Arabian Sea terminal

  • Yemen’s oil output has collapsed since after the Iran-backed Houthi militia overthrew the internationally recognized government
  • Yemen produced an average of 50,000 bpd of crude in 2018 compared with around 127,000 bpd in 2014

DUBAI: Yemen’s Safer oil company resumed pumping oil from its fields in Shabwa in southern Yemen to a terminal on the Arabian sea for export abroad, a company official told Reuters on Wednesday.
Safer, owned by the internationally recognized government of Yemen, is currently pumping at a rate of 5,000 barrels per day and expects to ramp up pipeline throughput to 15,000 barrels per day, the official said.
Yemen’s oil output has collapsed since after the Iran-backed Houthi militia overthrew the internationally recognized government of Abd-Rabbu Mansour Hadi in Sanaa.
Hadi’s government controls the oil-producing provinces of Shabwa and Hadramout, while the Houthi group controls the capital Sanaa and the oil terminal of Ras Issa on the Red Sea coast.
Yemen produced an average of 50,000 bpd of crude in 2018 compared with around 127,000 bpd in 2014. Last year it exported some quantities of oil.
Safer’s official said the company will use tankers to ship the crude from Iyad field (Block 4) to the Arabian Sea pipeline in Shabwa to avoid the Ras Issa terminal.