After months of speculation, the Abu Dhabi Commercial Bank (ADCB) and Union National Bank (UNB) have decided to merge and together they are to acquire Al Hilal Bank. In doing so, the UAE banking sector will see a banking giant formed. The transaction, which has been recommended unanimously to shareholders by the boards of ADCB and UNB, is subject to regulatory and shareholder approvals to be sought in the coming weeks, said a statement.
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. Al Hilal Bank will retain its existing name and brand and operate as a separate Islamic banking entity within the group.
ADCB will reinforce its position as the third largest financial institution in the UAE and will become the fifth largest in the Gulf Cooperation Council (GCC) region, with assets of AED420 billion ($114 billion). It is expected to have around one million customers, with a significant share of the UAE market (as at 30 September, 2018) including: 15% of total assets; 21% of retail loans; and 16% of deposits.
The transaction will create a robust platform to grow the bank’s consumer and wholesale businesses in both conventional and Islamic banking. The bank’s strategic objective will be to increase market share by prioritising excellence in customer service and continually innovating its product and service offering, particularly through digital channels, it said.
Greater scale will permit larger scope for financing to support the UAE’s economic agenda for diversification and growth, and more investment in the bank’s people, technology and infrastructure, it added.
The three banks will continue to operate independently until the combination becomes effective, which is expected within the first half of 2019. The combination is subject to approvals by shareholders and relevant regulators, including the UAE Central Bank. The transaction requires the approval of at least 75% by value of the shares represented at quorate general assembly meetings of each of ADCB and UNB.
Following completion of the merger of ADCB and UNB and the acquisition of Al Hilal Bank, the Government of Abu Dhabi, through the Abu Dhabi Investment Council, will own 60.2% of the combined bank. Other ADCB shareholders will own 28.0%, and other UNB shareholders will own 11.8% of the combined bank.
Eissa Mohamed Al Suwaidi is the chairman designate of the new banking group, and Mohamed Bin Dhaen Al Hamli is the vice chairman designate. Ala’a Eraiqat is the group chief executive officer designate of the new banking group. The new board and management of the combined bank will assume their new roles when the transaction becomes effective, it said.
Al Suwaidi commented: “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. The enlarged ADCB will have the scale and expertise to play a central role in the next stage of the UAE’s economic development. By building on past successes to produce an even stronger, performance-driven and customer-centric institution, the combined bank will continue to set high standards for the UAE banking sector and contribute to Abu Dhabi’s development into a global financial centre.”