The merger of Abu Dhabi’s two biggest banks is on track to complete by April 1.
The boards of National Bank of Abu Dhabi and FGB, its closest competitor in the emirate, have met to hammer out the final details of the combination.
"We are confident that the merger process will be successful and that we have selected very capable and experienced individuals for our board who are instrumental in driving our plans forward and desired outcomes," said Sheikh Tahnoon bin Zayed, the chairman-designate of the new bank.
"We look towards the future with great optimism as we anticipate the significant value that the new combined bank will provide to our shareholders, and to local, regional and international stakeholders, customers and employees."
NBAD and FGB will officially merge on April 1 and shares of the new entity will begin trading in Abu Dhabi the next day.
"We are pleased to report that we have made great strides in the merger process," said Abdulhamid Saeed, the chief executive of the combined bank. "After obtaining all necessary regulatory approvals we are on track to complete the merger and create one of the largest banks in the region in the next few weeks without any delays."
The merger, which was approved by both banks’ shareholders on December 7, was done in part to cut down on costs by removing duplicate posts and sharing resources
The move is expected to produce cost savings of about Dh500 million a year from 2019, according to research from the Egyptian investment bank EFG-Hermes.
Even though NBAD, the biggest bank by assets in the UAE, has made headway in building its consumer banking business, it will get a boost from joining forces with FGB, which has more loans to individuals on its books.
Retail lending accounts for about 40 per cent of FGB’s total lending book, while NBAD’s consumer lending portfolio makes up just 17 per cent of its outstanding loans.
Investors have backed the combination, especially as NBAD is considered one of the safest banks in the world; its high credit ratings will allow it to borrow money cheaply on behalf of the new entity, which will have assets of US$178 billion, making it one of the largest in the Middle East and North Africa.
Mr Saeed said the bank’s senior management had been chosen while other managerial positions were still being assigned to meet its aim to become a sizeable regional player and diversify its sources of income.
The combination of the lenders comes at a time of increasing strain amid the biggest drop in oil prices since the financial crisis of 2008.
Over the past two years, banks have been hit by dwindling deposits as governments scrambled to find cash as a first line of defence, making lending more difficult and riskier as defaults increased.
NBAD shares closed 1.96 per cent lower on Monday while FGB fell by 3.6 per cent.

Source: The National