Five banks control three-fourths of UAE’s banking business

FAB has largest asset base; ENBD’s is largest loan book

ABU DHABI: Just five banks- First Abu Dhabi Bank (FAB), ADCB, Abu Dhabi Islamic Bank (ADIB), all from Abu Dhabi; Emirates NBD and Dubai Islamic Bank (DIB) from Dubai, together control 75 per cent of the UAE’s banking business.

To be precise, 75 per cent of the country’s banking assets sit with these five banks, and so does the loan market of the UAE’s banking industry comprising about 45 banks in total, almost equally divided between local and international, which boasts the high profile names like HSBC, Standard Chartered and Citi.

More importantly, over 82 per cent of the deposits lying with the UAE banks have found their way to these five lenders leaving less than 18 per cent to be shared among the remaining 40 odd banks in the UAE.

Most large banks have accumulated large deposits with most liquid banks enjoying low credit-deposit (CD) ratio and high liquidity coverage ratio (LCR) with FAB claiming the largest deposit book.

“Our strategic actions have enabled us to further strengthen our balance sheet with a strong growth in deposits demonstrating FAB’s unique position as an aggregator of regional and global liquidity, and our flight-to-safety stutus in such volatile market conditions,” said Andre Sayegh, FAB’s group chief executive officer.

Among the said five banks, the largest three – FAB, Emirates NBD and ADCB together hold more than 61 per cent of the total assets and loans in the country, and when it comes to deposits, these three banks control more than two-thirds of the deposits in the system.

Mergers set the stage

Unlike many usual mergers, the ones among the UAE’s banking sector have been between larger banks resutling in much larger entities sending the scores of other banks to be marginal players.

It’s not for nothing the numbers are ‘skewed’ heavily towards the big banks. In fact, the genesis of the three largest banks can be traced back to about seven otherwise large banks that have merged to form these three ‘further large’ banks over the past more than a decade.

The trailblazing merger of Emirates Bank International (EBI) and National Bank of Dubai (NBD) took place in 2007 to form Emirates NBD, the largest bank then in the country and one of the largest in the region.

Union National Bank (UNB) and Al Hilal Bank in Abu Dhabi merged with ADCB in May 2019 to form the third largest UAE bank. National Bank of Abu Dhabi (NBAD), once the largest bank in the UAE merged with First Gulf Bank (FGB) in 2017 to form First Abu Dhabi Bank (FAB), the largest bank in the UAE currently.

Though the largest bank in the UAE in terms of assets at AED866 billion is FAB, the largest loan book is possessed by Emirates NBD with AED442.91 billion, way larger than that of FAB with AED384.58 billion.

With the largest deposit base of AED518.66 billion, a big chunk of FAB’s assets are currently in the form of cash balances and deposits with Central banks, within and outside UAE – at close to AED200 billion.

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