National Bank of Abu Dhabi and First Gulf Bank merger

Overview:

• Abu Dhabi’s two largest banks, National Bank of Abu Dhabi (Nbad) and First Gulf Bank (FGB) merged, creating the second biggest lender in the Middle East.
• The new bank, which is second only to Qatar National Bank in size in the region, has a market capitalisation of $29 billion, $175 million in assets and branches in 19 countries.
• The merger was concluded through a share-swap where shareholders in FGB received 1.254 Nbad shares for each FGB share they held.
• The combined entity has been rebranded First Abu Dhabi Bank.
• The Abu Dhabi government’s decision to consolidate its two main banks was a reaction to the impact of sustained low oil prices, with the merger expected to save the two lenders around $135 million a year in operating costs. 
• Lower than usual energy revenue in the Middle East has reduced liquidity in the regions' banks as government deposits have decreased and countries have had to eat into their cash reserves to fill budget deficits. 
• In addition to FGB and Nbad's merger, Abu Dhabi's government also combined state investment funds Mubadala and International Petroleum Investment Company (closed January 2017). 
• Credit Suisse and UBS acted as financial advisors to Nbad and FGB respectively on the banks' merger.

Ben Naylor - Regional editor