Tuesday 19 March 2024
 
»
 
»
SHARES SURGE

NBAD, FGB confirm talks over possible merger

DUBAI, June 19, 2016

National Bank of Abu Dhabi (NBAD) and First Gulf Bank (FGB) on Sunday confirmed they were in talks over a possible merger or a combination of the two businesses.

Reuters, citing sources aware of the matter, had reported on Thursday that the two banks were in preliminary talks on a merger.

The merger would create the largest bank by assets in the Middle East and Africa.

In Sunday's statement, the banks said each lender had formed a working group made up of senior executive management to "review the commercial potential along with any legal and structural aspects of a merger or combination".

Once complete, the groups will provide their recommendations to their respective boards of directors.

"At this time, there is no certainty that discussions between NBAD and FGB will result in a merger or combination," the statement added.

Shares in Abu Dhabi banks soared early on Sunday on news that NBAD and FGB were in merger talks, while most other stock markets in the Gulf were firm.

Many analysts said it was too early to take positions in the stocks before details were known. Some said a merger could benefit shareholders of both banks - Arqaam Capital said FGB would benefit from a stronger wholesale banking operation while NBAD was underepresented in retail banking - but HSBC predicted a pure merger would benefit only NBAD, while a merger through acquisition would destroy shareholder value at both banks.

"A share swap scenario presents significant dilution risks to shareholders of both banks," HSBC said.

Nevertheless, local retail investors cheered the idea of an Abu Dhabi mega-bank, with NBAD shares jumping their 15 percent daily limit and FGB gaining 7.7 percent. - Reuters
 




Tags: abu dhabi | NBAD | merger |

More Finance & Capital Market Stories

calendarCalendar of Events

Ads