The National Bank of Abu Dhabi (NBAD) and Bahrain-based Ahli United Bank yesterday denied media reports that they were engaged in merger talks.
NBAD said it is not a part of any negotiations or talks with any bank or financial institution in the region for merger or acquisition.
"As a responsible, transparent, and listed company on Abu Dhabi Exchange, NBAD will disclose any sensitive and vital information to the market, shareholders and the public to protect its stakeholders' interests while adhering to its policy of not commenting on rumours and speculations," it said in a press release yesterday.
Ahli United said in a statement on the Bahrain bourse Web site that "the report published in a local newspaper about a merger with the National Bank of Abu Dhabi wasn't issued by the Bank's management". Ahli United added it does not know "the source" of this news.
NBAD head of finance Jamil Halabi said he "had no idea" declining to comment further. Kuwait's al-Wasat newspaper said yesterday that NBAD and Ahli United were studying a possible merger to create the region's largest lender.
It said in an unsourced report talks had reached an advanced stage with a deal already ratified by both banks.
The daily said Ahli United Bank stock had been valued at 600 fils per share for the initial deal, while NBAD's stock was valued at Dh24 ($6.54) per share. The paper said one NBAD share would be worth three Ahli shares.
A second Kuwaiti daily, al-Watan, said in an another unsourced report that a potential merger was being studied and might take place via a share swap after the stocks of both banks had been evaluated.
Neither paper gave an overall value for a possible deal. Shares of Ahli United were up 5.43 per cent to 1.36 dinars ($3.61) in Bahrain and 1.43 per cent to 0.355 Kuwaiti dinars in Kuwait in early trade. Shares of NBAD were flat. "The reason AUB has been rising is the news that it might merge with NBAD," said Shakeel Sarwar Butt, head of asset management at SICO investment bank in Bahrain. "It has been under this speculation for a year. It is a merger candidate." Last summer, the Bahraini lender was targeted by International Bank of Qatar, an affiliate of National Bank of Kuwait, which made a $6.1 billion (Dh22bn) offer. But in August, Kuwait's Tamdeen Investment Company, which was then Ahli's second-largest shareholder, turned down the bid.
"It is reasonably valued, has a reasonable geographic presence around the Arab world and is well managed," said Butt. "Any bank that it merges with will get a good presence in six or seven other Arab countries."
Like other lenders in the world's biggest oil-exporting region, NBAD has been expanding abroad as competition in its home market intensifies. Abu Dhabi's largest lender by market value is well placed to take advantage of huge growth opportunities in the region, the bank's Chief Executive Officer Michael Tomalin said in April. It won approval last month from Libya's central bank to open a representative office in the North African oil producer and is seeking licenses to open branches in Qatar and Jordan, it said last month.
It has also said it plans to increase the number of branches in some Arab countries such as Oman, Bahrain, Kuwait, Egypt and Sudan.