The last few years have set the stage for consolidation within the Middle East’s banking sector as lenders look to merge, aiming for thinner margins. While ADCB, UNB and Al Hilal Bank announced earlier this year of their intentions to merge, the next bank to attract merger rumor is Abu Dhabi Islamic Bank (ADIB).
According to reports by Bloomberg that quoted anonymous sources, ADIB is in talks with banking behemoth FAB to merge with their entity. The publication revealed that the shareholders of both the lenders were in talks for a deal, which is still at a very early stage and might not materialize into a deal.
However, FAB strongly denied such reports of a possible merger in a disclosure in the Abu Dhabi Securities Exchange.
“Whilst the bank does not comment on speculation, FAB strongly denies the report issued by Bloomberg on the potential merger between FAB and ADIB,” says Mohamed Ahmed Zaki, the board of directors’ secretary.
“FAB currently has not entered discussions with ADIB to pursue any merger activity.”
He added that the bank is fully focused on maximizing the shareholder value following its integration. FAB was created in 2017 following a merger of two Abu Dhabi banks NBAD and FGB.
But this is not the first time that ADIB has been associated with a merger. Last year, there were reports that Abu Dhabi might merge ADIB with another Islamic lender Al Hilal Bank. However, such a deal did not materialize, and Al Hilal became a party to a three-bank merger.
The bank mergers come in the wake of low oil prices that have thinned lucrative government deposits in most of these lenders. Moreover, experts also call the UAE an “overbanked” market as 50 lenders vie for 9 million consumers.
The recent wave of consolidation has also been hailed since most banks in the capital have similar owners.