2 Abu Dhabi banks to merge into largest Gulf Arab bank

Stockholders at two Abu Dhabi banks approved a plan today to merge the firms into the biggest bank of all Gulf Arab countries with assets of USD 178 billion amid a regional economic slump.
Shareholders at the National Bank of Abu Dhabi and First Gulf Bank approved the tie-up at two separate meetings, a move first publicly discussed by the two financial firms in June.
Under terms of the deal, the combined company will be known as NBAD. FGB shareholders will receive 1.254 NBAD shares for each FGB share they hold. After the deal is concluded, FGB stockholders will own 52 per cent of the new bank.

Officials say the government of Abu Dhabi and government-related firms will own 37 per cent of the bank, which will have a presence in 21 countries.
The chairman of the new firm is slated to be Sheikh Tahnoon bin Zayed Al Nahyan, a member of the Abu Dhabi ruling family. He now serves as both chairman of FGB and as the national security adviser of the United Arab Emirates, a federation of seven sheikhdoms on the Arabian Peninsula that also includes Dubai.
"The overwhelming vote of support from FGB and NBAD shareholders to approve this historic merger is a clear testament to the compelling rationale and value proposition for creating a bank with the financial strength, scale and expertise to deliver benefits for our customers, our shareholders and for the wider UAE economy," Sheikh Tahnoon said in a statement.

Moody's has said the merger would make the new NBAD the largest bank across Gulf Arab nations, with some $170 billion in assets. In a statement today after the votes, the two banks put their joint assets at 655 billion dirhams (USD 178 billion).
"The proposed merger is credit-positive for both banks," Moody's said in July. "NBAD's pro-forma credit profile will benefit from greater business diversification, stronger profitability and capital metrics, while FGB's depositors and senior creditors will be transferred to NBAD, a larger and fundamentally stronger entity."
The merger comes amid a regional slowdown in the Middle East, caused by the long slide in oil prices from over USD 100 a barrel in mid-2014 to around USD 50 now. Lower prices have squeezed businesses throughout the region and slowed government-backed construction, causing a rise in loan defaults.