NBAD and FGB shares soar as Abu Dhabi banks confirm merger talks

If completed, the merger would create an entity with assets of around US$170 billion, surpassing Qatar National Bank to become the largest bank in the Middle East.

NBAD shares climbed 14 per cent in early trading in Abu Dhabi. Silvia Razgova / The National

Shares in NBAD surged to a three-month high in trading on Sunday, after the bank confirmed news reports it was in merger talks with FGB.

If completed, the merger of the UAE’s two largest banks by market capitalisation would create an entity with assets of about US$170 billion, surpassing Qatar National Bank to become the largest bank in the Middle East.

“NBAD and FGB have commenced discussions regarding the possibility of a merger of the two banks, or a combination of the two businesses,” the bank said in a statement on the Abu Dhabi stock market, confirming news reports from Thursday.

NBAD shares closed up 15 per cent at Dh9.20, while shares in FGB closed up 11.49 per cent at Dh13.10, their highest level in about two months.

“Each bank has 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,” the bank said.

“At this time, there is no certainty that discussions between NBAD and FGB will result in a merger or combination.”

The merger talks come as banks across the Arabian Gulf face tightening liquidity in the wake of lower oil prices, with FGB and NBAD reporting lower first-quarter profits year on year.

Share gains by the banks led to Abu Dhabi’s headline index closing up by 4.68 per cent at 4,524.41, its highest level since late April.

The capital’s other banks were caught up in the rally, with shares in UNB and ADCB rising by 6.96 per cent and 6.71 per cent, respectively.

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