Abu Dhabi Commercial Bank says in merger talks with two rivals

By Stanley Carvalho and Hadeel Al Sayegh

ABU DHABI (Reuters) - Abu Dhabi Commercial Bank (ADCB) said it is in early merger talks with Union National Bank and Al Hilal Bank, which could potentially form a lender with $113 billion in assets.

Abu Dhabi, the oil-rich capital of the United Arab Emirates, has been revamping its economy and pressing ahead with consolidating state-owned entities after two years of low oil prices weighed heavily on its revenues. Two of Abu Dhabi's top banks were merged last year to create First Abu Dhabi Bank with total assets of $175 billion, while two of its big sovereign wealth funds were also combined.

ADCB, majority owned by the Abu Dhabi government, said in a disclosure to the Abu Dhabi Securities Market that it is in talks with UNB and separately with unlisted Al Hilal Bank. If it goes ahead, a merger of the three could create an entity with $113 billion in assets, according to Thomson Reuters data.

The statement from ADCB followed a Bloomberg News report of the talks which said that a potential merger could create the Gulf's fifth biggest bank.

Talks with both UNB and Al Hilal are at a very preliminary stage, ADCB said, adding that they may not result in a deal.

UNB and Al Hilal representatives did not respond to calls, while the Abu Dhabi government did not reply to an email.

While ADCB, the second largest bank in Abu Dhabi and UNB are both majority government owned, Islamic lender Al Hilal Bank is fully-owned by the Abu Dhabi government.

Consolidation has also hit the banking sectors of other Gulf countries. Bahrain's Ahli United Bank is in merger talks with Kuwait Finance House, which could be the first cross-border tie-up between Gulf banks in recent years,

Meanwhile, Saudi British Bank and Alawwal Bank have also agreed a merger to create Saudi Arabia's third-biggest lender, in a $5 billion deal that marks the first major banking tie-up in the kingdom in two decades.

(Reporting by Stanley Carvalho and Hadeel Al Sayegh; Editing by Alexander Smith)