First Abu Dhabi to carve out payments business

Lender is creating a wholly-owned subsidiary with a view to targeting new geographies and customers

Abu Dhabi, United Arab Emirates - February 7th, 2018: FAB (First Abu Dhabi Bank) Head office - Business Park. Wednesday, February 7th, 2018. Twofour54, Abu Dhabi. Chris Whiteoak / The National

First Abu Dhabi Bank, the UAE's largest lender, is to carve out its payments business into a fully-owned subsidiary.

The move is designed to "unlock growth potential from new geographies and customer segments" and will help enhance FAB's position in the payments space, the bank said in a statement on Monday.

“A fully owned subsidiary will open up the full potential of FAB’s payment business and commercialise our processing offering at scale, across a broad range of customers and partners," the bank's chief executive, Andre Sayegh, said.

"In addition to our involvement in the new digital bank being created by ADQ, this move represents another significant long-term strategic opportunity for FAB, forming a key part of our growth and transformation agenda," he added.

FAB last week reported a 19 per cent year-on-year decline in third quarter net profit to Dh2.5 billion as operating income fell 15 per cent to Dh4.3bn.

The bank is not the first UAE lender to separate payment processing. Network International started as part of Emirates NBD before a partial sale to private equity groups and an eventual initial public offering on the London Stock Exchange last year, raising £1.1bn through a deal in which Mastercard became its cornerstone investor.

FAB said its new payments subsidiary is on track to go live early next year, and that further updates would be provided to the market "over the coming months".