First Abu Dhabi Bank (FAB) has completed the merger of Bank Audi Egypt with its Egyptian operations, consolidating its market position in the most populous Arab country.
The combined entity will operate under FAB’s new brand identity in Egypt, FABMISR. The lender, with 69 branches and 207 ATMs, has become one of the largest foreign banks in the Egyptian market, with 185 billion Egyptian pounds ($10bn) in assets as of March 31, FAB said in a statement on Monday.
The merger will enable FAB to “further extend our operations’ footprint in Egypt — one of the most promising strategic markets in the region”, Hana Al Rostamani, group chief executive at FAB, said.
“This investment highlights our firm confidence in the Egyptian economy, in line with government initiatives to foster the investment climate across all sectors. FAB believes that Egypt is a strategic gateway to Mena; hence, this step will undoubtedly contribute to our strong position regionally and globally.”
The combined entity is expected to complete systems integration by the end of this year, allowing customers to conduct transactions through FABMISR branches, the bank said on Monday.
Last April, FAB announced receiving approval from regulators to transfer the shares after it agreed to buy the Egyptian arm of Lebanon-based Bank Audi in January 2021 for an undisclosed sum.
FAB had initially started talks in 2020 to acquire Bank Audi’s assets in Egypt but later suspended discussions because of the outbreak of the coronavirus pandemic.
FAB believes that Egypt is a strategic gateway to Mena; hence, this step will undoubtedly contribute to our strong position regionally and globally
Hana Al Rostamani,
group chief executive, FAB
The acquisition is part of FAB’s regional expansion plans. The lender, which opened a representative office in Iraq in March, withdrew its non-binding offer to acquire a majority stake in Egypt's largest investment bank, EFG Hermes.
FAB cited “continuing global market uncertainty and volatile macroeconomic conditions” as reasons for dropping the bid, it said at the time.
“As the largest bank in the UAE, FAB continues to implement its ambitious growth strategy through focused acquisition activities,” Karim Karoui, FAB’s group head of mergers and acquisitions and chairman of FABMISR, said.
FAB more than doubled its first-quarter net income to a record high, driven by the sale of its majority stake in its payments business and improved performance of the bank’s core business.
Net profit attributable to shareholders for the three months to the end of March surged to Dh5.1bn ($1.4bn), the lender said in April.
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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
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2018 Shoplifters, Hirokazu Kore-eda
2017 The Square, Ruben Ostlund
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Estijaba – 8001717 – number to call to request coronavirus testing
Ministry of Health and Prevention – 80011111
Dubai Health Authority – 800342 – The number to book a free video or voice consultation with a doctor or connect to a local health centre
Emirates airline – 600555555
Etihad Airways – 600555666
Ambulance – 998
Knowledge and Human Development Authority – 8005432 ext. 4 for Covid-19 queries
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