The proposed merger between three UAE banks - Abu Dhabi Commercial Bank, Union National Bank and Al Hilal Bank – would be credit-positive for the country’s banking industry, according to Moody’s. Chris Whiteoak / The National
The proposed merger between three UAE banks - Abu Dhabi Commercial Bank, Union National Bank and Al Hilal Bank – would be credit-positive for the country’s banking industry, according to Moody’s. Chris Whiteoak / The National
The proposed merger between three UAE banks - Abu Dhabi Commercial Bank, Union National Bank and Al Hilal Bank – would be credit-positive for the country’s banking industry, according to Moody’s. Chris Whiteoak / The National
The proposed merger between three UAE banks - Abu Dhabi Commercial Bank, Union National Bank and Al Hilal Bank – would be credit-positive for the country’s banking industry, according to Moody’s. Chri

Three-way merger of UAE banks 'credit positive' for industry, says Moody’s


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The potential merger of Abu Dhabi Commercial Bank, Union National Bank and Al Hilal Bank would be credit positive for the country’s banking industry, according to Moody’s Investors Service.

"The merger would increase banks' pricing power, reduce pressure on their funding costs and increase their ability to meet sizeable investments," the rating agency said in a report on Monday.

It would also contribute to consolidation of the "overbanked" sector in the UAE.

ADCB, the second largest lender in the capital, said last week it is exploring the possibility of a merger with rival UNB and Sharia-compliant lender Al Hilal, which would create the Arabian Gulf's fifth largest banking entity with around $114 billion (Dh418bn) in combined assets.

The talks “are at a very preliminary stage and may not result in a transaction,” ADCB said in a statement to the Abu Dhabi Securities Exchange, where its shares are traded.

In a separate regulatory disclosure, UNB confirmed talks with ADCB, but did not mention any discussion with Al Hilal. Shares for ADCB and UNB rallied following the announcements.

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Read more:

UAE’s largest banks to see 'solid' profits this year despite rising costs 

Bank Dhofar and National Bank of Oman in talks for latest GCC banking merger

HSBC, RBS’s Saudi affiliates strike early merger deal

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The potential merger is subject to approvals from the banks’ boards of directors, shareholders and regulators.

Banking competition in the UAE – where 60 banks serve a population of nine million – has intensified in recent years as lending opportunities dropped because of slowing economic and credit growth due to lower oil prices.

Lenders are increasingly focusing on high-quality borrowers at the expense of small-to-medium-sized enterprises, among which default rates are typically higher, Moody's said.

GCC banks are expected to perform better this year than last, as liquidity improves on a stronger economic environment and rebound in oil prices to above $70 a barrel from a three-year slump.

However, banks' profits will likely stabilise at a lower rate than in previous years, while margins will remain tight, analysts from Moody's and S&P have predicted this year.

“The competition for concentrated deposit sources, combined with the increase in US interest rates, is contributing to an increase in UAE banks’ funding costs,” Moody’s said.

The United States Federal Reserve is set to meet this month and is expected to raise interest rates. Actions by the Fed are closely mirrored by countries that have currencies pegged to the dollar. 

Personal finance: What a UAE bank merger might mean for consumers

Consolidation of the banking system will diminish the competitive pressure for funding and increase banks' scale and revenue base, the agency said.

Alliances among financial institutions are also taking place elsewhere in the region. HSBC and RBS' affiliates in Saudi Arabia, and Bank Dhofar and National Bank of Oman are set to tie-up.

The 2017 merger of First Gulf Bank and National Bank of Abu Dhabi to form First Abu Dhabi Bank – the largest bank in the UAE – has already provided significant synergies, both in cost efficiencies and business opportunities, said Emilio Pera, partner and head of audit Lower Gulf KPMG.  

"The latest potential merger in the UAE capital drives further consolidation in a market where top-line growth is pressured and there are more challenging regulatory and capital demands," Mr Pera said.

ADCB, UNB and Al Hilal have common shareholding, with Abu Dhabi Investment Council holding stakes of 63 per cent in ADCB, 50 per cent in UNB and 100 per cent in Al Hilal.

“We estimate that the combined entity would have assets of around $113bn, closer to the dominant [UAE bank] First Abu Dhabi Bank, which had $188bn of assets as of June 2018, and Emirates NBD, which had $130bn of assets as of June 2018,” the report said.

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The specs

Engine: 2.0-litre 4-cylturbo

Transmission: seven-speed DSG automatic

Power: 242bhp

Torque: 370Nm

Price: Dh136,814

Specs

Engine: 51.5kW electric motor

Range: 400km

Power: 134bhp

Torque: 175Nm

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Jetour T1 specs

Engine: 2-litre turbocharged

Power: 254hp

Torque: 390Nm

Price: From Dh126,000

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SPECS
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BULKWHIZ PROFILE

Date started: February 2017

Founders: Amira Rashad (CEO), Yusuf Saber (CTO), Mahmoud Sayedahmed (adviser), Reda Bouraoui (adviser)

Based: Dubai, UAE

Sector: E-commerce 

Size: 50 employees

Funding: approximately $6m

Investors: Beco Capital, Enabling Future and Wain in the UAE; China's MSA Capital; 500 Startups; Faith Capital and Savour Ventures in Kuwait

The%20specs
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The specs

Engine: 2.0-litre 4cyl turbo

Power: 261hp at 5,500rpm

Torque: 405Nm at 1,750-3,500rpm

Transmission: 9-speed auto

Fuel consumption: 6.9L/100km

On sale: Now

Price: From Dh117,059

SPEC%20SHEET%3A%20APPLE%20M3%20MACBOOK%20AIR%20(13%22)
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The specs: 2018 Opel Mokka X

Price, as tested: Dh84,000

Engine: 1.4L, four-cylinder turbo

Transmission: Six-speed auto

Power: 142hp at 4,900rpm

Torque: 200Nm at 1,850rpm

Fuel economy, combined: 6.5L / 100km

UAE currency: the story behind the money in your pockets
UAE currency: the story behind the money in your pockets
The specs: 2019 Cadillac XT4

Price, base: Dh145,000

Engine: 2.0-litre turbocharged in-line four-cylinder engine

Transmission: Nine-speed automatic

Power: 237hp @ 5,000rpm

Torque: 350Nm @ 1,500rpm

Fuel economy, combined: 8.7L / 100km

Dust and sand storms compared

Sand storm

  • Particle size: Larger, heavier sand grains
  • Visibility: Often dramatic with thick "walls" of sand
  • Duration: Short-lived, typically localised
  • Travel distance: Limited 
  • Source: Open desert areas with strong winds

Dust storm

  • Particle size: Much finer, lightweight particles
  • Visibility: Hazy skies but less intense
  • Duration: Can linger for days
  • Travel distance: Long-range, up to thousands of kilometres
  • Source: Can be carried from distant regions
Real estate tokenisation project

Dubai launched the pilot phase of its real estate tokenisation project last month.

The initiative focuses on converting real estate assets into digital tokens recorded on blockchain technology and helps in streamlining the process of buying, selling and investing, the Dubai Land Department said.

Dubai’s real estate tokenisation market is projected to reach Dh60 billion ($16.33 billion) by 2033, representing 7 per cent of the emirate’s total property transactions, according to the DLD.

Global state-owned investor ranking by size

1.

United States

2.

China

3.

UAE

4.

Japan

5

Norway

6.

Canada

7.

Singapore

8.

Australia

9.

Saudi Arabia

10.

South Korea

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Countries offering golden visas

UK
Innovator Founder Visa is aimed at those who can demonstrate relevant experience in business and sufficient investment funds to set up and scale up a new business in the UK. It offers permanent residence after three years.

Germany
Investing or establishing a business in Germany offers you a residence permit, which eventually leads to citizenship. The investment must meet an economic need and you have to have lived in Germany for five years to become a citizen.

Italy
The scheme is designed for foreign investors committed to making a significant contribution to the economy. Requires a minimum investment of €250,000 which can rise to €2 million.

Switzerland
Residence Programme offers residence to applicants and their families through economic contributions. The applicant must agree to pay an annual lump sum in tax.

Canada
Start-Up Visa Programme allows foreign entrepreneurs the opportunity to create a business in Canada and apply for permanent residence. 

MATCH INFO

 

Maratha Arabians 107-8 (10 ovs)

Lyth 21, Lynn 20, McClenaghan 20 no

Qalandars 60-4 (10 ovs)

Malan 32 no, McClenaghan 2-9

Maratha Arabians win by 47 runs

The specs

Engine: 2.0-litre 4-cylinder turbo

Power: 240hp at 5,500rpm

Torque: 390Nm at 3,000rpm

Transmission: eight-speed auto

Price: from Dh122,745

On sale: now

UK-EU trade at a glance

EU fishing vessels guaranteed access to UK waters for 12 years

Co-operation on security initiatives and procurement of defence products

Youth experience scheme to work, study or volunteer in UK and EU countries

Smoother border management with use of e-gates

Cutting red tape on import and export of food

While you're here
Ms Yang's top tips for parents new to the UAE
  1. Join parent networks
  2. Look beyond school fees
  3. Keep an open mind
The specs
  • Engine: 3.9-litre twin-turbo V8
  • Power: 640hp
  • Torque: 760nm
  • On sale: 2026
  • Price: Not announced yet
The burning issue

The internal combustion engine is facing a watershed moment – major manufacturer Volvo is to stop producing petroleum-powered vehicles by 2021 and countries in Europe, including the UK, have vowed to ban their sale before 2040. The National takes a look at the story of one of the most successful technologies of the last 100 years and how it has impacted life in the UAE. 

Read part four: an affection for classic cars lives on

Read part three: the age of the electric vehicle begins

Read part two: how climate change drove the race for an alternative 

Singham Again

Director: Rohit Shetty

Stars: Ajay Devgn, Kareena Kapoor Khan, Ranveer Singh, Akshay Kumar, Tiger Shroff, Deepika Padukone

Rating: 3/5