Abu Dhabi approves second mega-merger to reshape economy

Dual tie-ups in banking and investment fields seek to rebalance emirate away from slumped oil market

In its second such decision in as many weeks, the government of Abu Dhabi announced on 3 July that it has approved a mega-merger between two of the emirate’s biggest financial institutions, with the aim of unleashing a surge of private investment.

Under the deal, the National Bank of Abu Dhabi (NBAD) will combine with First Gulf Bank (FGB) to form a new lender with market capitalisation of $29bn and total assets of $175bn.

FGB chairman Sheikh Tahnoon Bin Zayed Al Nahyan will lead the combined entity, which will continue to use the NBAD name. Meanwhile, NBAD chief Nasser Ahmed Alsowaidi will serve as vice-chair.

In a joint statement, the banks said that the merger “will create a bank with the financial strength, expertise, and global network to support the UAE’s economic ambitions at home”, while helping to drive the emirate’s growing international business relationships.

Speaking separately to the Financial Times, Alsowaidi said: “Now, more than ever, the UAE will benefit from a strong, financial partner with the capacity to meet new challenges, drive domestic growth and support the country’s ever-greater connections to the global economy.

“We will have the capital, expertise and international networks to be the preferred financial partner for anyone doing business along the West-East corridor.”

Just days before the NBAD-FGB announcement, Abu Dhabi crown prince His Highness Sheikh Mohammed bin Zayed revealed via state news agency Zawya that specialist finance firms International Petroleum Investment Company (IPIC) and Mubadala Development Company would join forces.

In a statement released through the agency, the crown prince promised a fertile future for numerous industries. “Integrating the two entities,” he said, “would create greater benefits and enhanced economic value to the government of Abu Dhabi.

“The combined entity will realise synergies and growth in multiple sectors, including the energy and utilities sector, technology, aerospace, healthcare, real estate and financial investments.”

He added that the merged firm “will also have the ability to contribute more significantly to the diversification of the economy, in line with the Abu Dhabi Plan and the country’s long-term vision”.

That, he noted, would spur “the creation of quality, long-term employment and development of human capital in critical sectors for the emirate”.

In seeking to rebalance the emirate’s economy away from the languishing oil trade, the Abu Dhabi Plan echoes similar measures outlined in the Vision 2030 initiative for Saudi Arabia.

As The Treasurer reported earlier this year, the Saudi scheme has introduced a new economic outlook based upon SME entrepreneurship, privatisation and investment in new industries.

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