Three UAE banks in merger talks to create over Dh410 billion bank

Agencies
September 4, 2018

Abu Dhabi, Sept 4: 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 (Dh 414.71 billion) in assets.

Abu Dhabi 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 Exchange 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.

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News Network
April 11,2020

Dubai, Apr 11: The UAE has conducted over 49,000 Covid-19 tests among UAE citizens and residents, it was revealed on Friday, using state-of-the-art technology in line with the 's plans to intensify virus screening in order to bring the disease under control.

The accelerated investigative measures helped detect 370 new coronavirus cases among various nationalities, all of whom are in a stable condition and receiving the necessary care.

This took the total number of infections in the country to 3,360, according to a MoHaP statement.

The Ministry also revealed the death of two patients suffering from Covid-19. Both of the deceased were Asian nationals and had pre-existing chronic illnesses. The total number of deaths has now reached 16.

The Ministry expressed its sincere condolences to the families of the deceased and wished a speedy recovery to all patients, calling on the public to cooperate with health authorities and comply with all precautionary measures, particularly social distancing protocols, to ensure the safety and protection of the public.

The Ministry also announced the full recovery of 150 new cases after receiving the necessary treatment, taking to 418 the total of those now recovered from the virus in the UAE.

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News Network
May 11,2020

May 11: Saudi Arabia will triple its value-added tax rate and suspend a cost of living allowance for state workers, it said on Monday, seeking to shield finances hit by low oil prices and a slump in demand for its lifeline export worsened by the new coronavirus.

Historic oil output cuts agreed by Riyadh and other major producers have given only limited support to prices after they sank on oversupply caused by a war for petroleum market share between the kingdom and its fellow oil titan Russia.

Saudi Arabia, the world's largest oil exporter, is also being hit hard by measures to fight the new coronavirus, which are likely to curb the pace and scale of economic reforms launched by Crown Prince Mohammed bin Salman.

"The cost of living allowance will be suspended as of June 1, and the value added tax will be increased to 15% from 5% as of July 1," Finance Minister Mohammed al-Jadaan said in a statement reported by the state news agency. "These measures are painful but necessary to maintain financial and economic stability over the medium to long term...and to overcome the unprecedented coronavirus crisis with the least damage possible."

The austerity measures come after the kingdom posted a $9 billion budget deficit in the first quarter.

The minister said non-oil revenues were affected by the suspension and decline in economic activity, while spending had risen due to unplanned strains on the healthcare sector and the initiatives taken to support the economy.

"All these challenges have cut state revenues, pressured public finances to a level that is hard to deal with going forward without affecting the overall economy in the medium to long term, which requires more spending cuts and measures to support non-oil revenues stability," he added.

The government has cancelled and put on hold some operating and capital expenditures for some government agencies, and cut allocations for some reform initiatives and projects worth a total 100 billion riyals ($26.6 billion), the statement said.

Central bank foreign reserves fell in March at their fastest rate in at least 20 years and to their lowest since 2011, while oil revenues in the first three months of the year fell 24% from a year earlier to $34 billion, pulling total revenues down 22%.

"The reforms are positive from a fiscal side as greater adjustment is essential. However, the tripling of VAT is unlikely to help that much in 2020 revenue wise with the expected fall in consumption," said Monica Malik, chief economist at Abu Dhabi Commercial Bank.

She said she kept unchanged her deficit forecast of 16.3% of GDP for this year, which already factors in a greater than previously announced spending cut.

About 1.5 million Saudis are employed in the government sector, according to official figures released in December.

In 2018, Saudi Arabia's King Salman ordered a monthly payment of 1,000 riyals ($267) to every state employee to compensate them for the rising living costs after the government hiked domestic gas prices and introduced value-added tax.

DIFFICULT TIMES

A committee has been formed to study all financial benefits paid to public sector employees and contractors, and will submit recommendations within 30 days, the statement said.

In late 2015, when oil prices fell from record highs, the kingdom slashed lavish bonuses, overtime payments and other benefits once considered routine perks in the public sector.

In a country without elections and with political legitimacy resting partly on distribution of oil revenue, the ability of citizens to adapt to such reforms is crucial for stability.

"Tripling the VAT will test the limits of the balance between revenues and consumption as the economy dives into a deep recession. The move will impact consumption and could also lower the expected revenues," said John Sfakianakis, a Gulf expert at the University of Cambridge.

"These are pro-austerity and pro-revenue moves rather than pro-growth ones," he said.

Hasnain Malik, head of equity strategy at Tellimer, said the VAT rise could bring about $24-$26.5 billion in additional non-oil fiscal revenue. The rise would hit consumer spending further but was a needed step towards fiscal sustainability, he said.

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News Network
May 5,2020

Dubai, May 5: Saudi Arabian prosecutors have ordered the arrest of a Saudi citizen for insulting an Asian expatriate and abusing him for not embracing Islam.

A video went viral online showing the expat, apparently with little knowledge of the Arabic language, being insulated by an Arabic-speaking man who does not appear in the clip, for having not embraced Islam and for not fasting.

A monitoring centre affiliated with the public prosecution examined the video the content of which “shows the citizen’s use of abusive words against the Asian resident on the pretext of inviting him to Islam,” the prosecution source said.

“The public prosecution closely follows up whatever infringes rights of citizens and residents including harm to their dignity and legal rights regardless of pretexts of such infringement,” the source added.

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