Shareholders approve NBAD, FGB merger

Shareholders of National Bank of Abu Dhabi (NBAD) and First Gulf Bank (FGB) have approved the lenders’ plans to merge, in a move that will create the Middle East’s largest bank with nearly AED 642 billion ($175 billion) in assets.

The approvals came in general assembly meetings held on Wednesday, paving the way for the banks to combine in the first quarter of 2017.

The deal will be executed through a share swap, with FGB shareholders receiving 1.254 NBAD shares for each FGB share they hold. Shares of FGB would be subsequently delisted from the Abu Dhabi bourse.

Following the issue of the new NBAD shares, FGB shareholders will own approximately 52 percent of the combined bank and NBAD shareholders will own the rest. The Abu Dhabi government and related entities will own approximately 37 percent.

Last month, Bloomberg reported that Abu Dhabi is studying the prospects of more bank mergers in a bid to boost its financial services industry, following the NBAD-FGB merger.

The emirate is considering a plan to merge Abu Dhabi Commercial Bank (ADCB) and Union National Bank (UNB), and also combine Abu Dhabi Islamic Bank (ADIB) with Al-Hilal Bank, the agency said, citing sources with knowledge of the matter.

ADCB, UNB, and ADIB, however, later issued statements denying the merger talks.

Nevertheless, Gulf lenders stand to benefit from consolidation in a sector struggling with a liquidity crunch, analysts told Argaam last month.