Both ADCB and UNB were separate entities before this merger. ADCB was a commercial, retail, and investment bank with its network of 48 branches in the UAE and abroad. The UNB was a domestic bank providing services to individuals and various corporate entities and it was supported by its extensive network of banking sectors across the Emirates over 56 different locations. One of the biggest retail banking units in UAE was created on Wednesday as Abu Dhabi Commercial Bank(ADCB) and Union National Bank(UNB) merged acquiring Al Hilal Bank.
The respective boards of Abu Dhabi Commercial Bank and UNB on Tuesday held a meeting for the approval of this potential merger. There was a unanimous approval decision made by their Shareholders. After this successful merger, the new entity traded under the name of Abu Dhabi Commercial Bank (ADCB). The UNB will be dissolved of its legal identity and was delisted off the course.
Al-Hilal under this merger will retain its existing identity and will continue to operate as a separate Islamic Bank. Al-Hilal will operate within its borders and will focus on retail banking services. This successful merger ADCB accounts for about 21 per cent of the country's total Loan market. The new bank is now serving more than a Million customers across the Emirates.
The majority shares of the new banking group are now owned by Government Investment Fund Abu Dhabi Investment Council (ADIC). The shares of these two banks are traded in Abu Dhabi bourse while Al-Hilal is wholly owned by ADIC, which is now a part of Mubadala Investment Company. After this major merger, a total of 60.2 per cent of shares of ADCB are now owned by Government. The rest of the 28 per cent is owned by ADCB shareholders. And the remaining 11 per cent are directed towards UNB shareholders.
The ADCB promised no disturbance will be caused to their customer service as per the integration. The ADCB group is led by Eissa Al Suwaidi, the bank's chairman. Al-Hilal after the merger is mainly focused on Sharia-compliant retail Banking Services.
The financial impact of this merger on UAE's economy
This merger has played a vital role in impacting the financial economy of the Emirates. In 2017 the first Abu Dhabi Bank was created through a merger between two commercial banks the National Bank of Abu Dhabi and First Gulf Bank.
Also Recently the Dubai Islamic Bank (DIB) is considering the possibility of acquiring its rival Noor Bank. This deal is still on board with negotiating the possibilities of the merge. The Dubai Islamic Bank has also appointed a team of Legal Advisors to cut through the procedures of the potential deal.
Similarly, the ADCB with its new banking group can provide excellent banking services to the core market in the UAE. This has also optimized the goal of sustainable and long term growth which the ADCB had the vision to provide in the UAE's market. This merger was also an impactful step in the transformation of the UAE's Economy. The planning for the integration of these 3 banks is progressing at a good rate and will be carried out in the second half of 2019. Gradually ADCB brand will replace the UNB brand and hence the customers will be given access to a modified and wide range of products and services.
The Emirates government in April 2019 bought a major stake in Invest Bank in Sharjah, the reports also indicated that there can be a possible bank merger. The sources directed the options weighing towards the merger between the Invest Bank and the Bank of Sharjah with The United Arab Bank. Meanwhile, Saudi Arabia’s National Commercial Bank is also pursuing its merge with Riyad Bank.
Even though these mergers are not yet confirmed but they have already made a strong break-through in the shares of their respective banks. Various investors and analysts are keen on buying shares of these respective banks involved in the merge as they see a good growth rate of their investment post-merger.
The sector of financial institutions involving around 50 banking organizations in the UAE, the investors, the banking executives describe this market as over-crowded. This also makes the growth of many small scale banks more difficult. But such mergers are very effective and efficient for financial developments.
Such transactions are always important in the economic development of a country. In these banking circles, there could more such mergers. Approximately 50 banks are competing in the market with around 9 million people. These transactions are always beneficial according to the UAE's economic vision. “Forming of powerful banking groups with human potentials and capabilities which would enhance the national economic competitiveness and its future aspirations” stated the Crown Prince of Abu Dhabi his Highness Shaikh Mohammad Bin Zayed Al Nahyan and Deputy Supreme Commander of the UAE Armed Forces.
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