FAB, Emirates NBD mulling growth plans as ADCB is busy downsizing

ADCB to sell insurance business to Orient Insurance Group

ABU DHABI/November 6-2020: Abu Dhabi Commercial Bank (ADCB), the third largest bank in the UAE with an asset base of AED409.27 billion, is busy downsizing its operations by quitting unviable markets and leaving non-core businesses.

On the contrary, the two largest banks in the country – First Abu Dhabi Bank (FAB) and Emirates NBD are on the prowl looking out for new banking assets, especially outside the UAE, to add to their portfolio of assets.

Both these banks are large on the asset fronts with FAB boasting an asset base of AED955.15 billion, whereas Emirates NBD had an asset base of AED692.10 billion as of September 30, 2020.

ADCB, which has already announced its plans to exit its operations in Qatar and Kuwait, has lately closed its representative offices in London and Singapore too.

ADCB has recently informed the market authorities that the lender has started the process of closing operations in both the countries.

Exiting insurance business

As if this is not enough, ADCB that has concluded its amalgamation with Union National Bank (UNB) last year, has moved to sell its 49 per cent stake in the UAE insurer Orient UNB Takaful and its 20 per cent stake in Egyptian insurer Orient Takaful to Orient Insurance Company.

Both these insurance assets have become part of the ADCB book as a baggage that has been brought by UNB.

“The sale of the shares in the two companies to Orient Insurance Company, which is part of the Al Futtaim Group, is in line with ADCB’s strategy to focus on its core areas of business,” the ADCB statement said.

The sale, the statement said, is expected to be completed within a maximum period of six months, subject to necessary regulatory approvals.

ADCB, the lender that has been in the news for its large exposure to the tune of about AED4.27 billion ($1.16 billion) to the embattled NMC Healthcare-Finablr combine, has made it amply clear that the bank is more keen on focusing on the UAE operations.

FAB and Emirates NBD

Though may sound a bit counterintuitive during these bad times, both First Abu Dhabi Bank (FAB) and Emirates NBD do not look like perturbed by the current state of affairs on the economic front engendered by the COVID 19-induced slowdown.

Both banks that have acquired their present size through mergers at different periods, are still working on strategies to not only scale up operations, but at the same time establish presence outside their home market too.

Digital bank by ADQ

Recently, First Abu Dhabi Bank (FAB) has transferred the legacy licence ‘freed’ by the NBAD-FGB merger, to the Abu Dhabi-based investment holding company, ADQ, on a condition that FAB should have 10 per cent ownership claim in the new digital bank to be set up by the investment holding company.

FAB has booked another ten per cent ownership in the yet-to-be established bank at the time of the digital bank’s initial public offering (IPO).

Lebanese Bank Audi, Egypt

FAB had initiated the talks to acquire Lebanese Bank Audi’s operations in Egypt in January, but the negotiations had to be put on hold in May considering the unfavourable market conditions.

Last week, FAB said that it had resumed exclusive talks to acquire Lebanese Bank Audi activities in Egypt. “These negotiations are subject to the requirements of due diligence examination, agreement on final transactions and the required regulatory approvals,” the bank added in a disclosure statement to the Abu Dhabi Stock Exchange (ADX).

Mohamed Bedeir, CEO and managing director of Bank Audi, confirmed that exclusive negotiations have been resumed between Bank Audi Lebanon and First Abu Dhabi Bank of UAE on the sale of former’s wholly owned subsidiary in Egypt, to the UAE bank.

Emirates NBD growth plan

It was late 2018, Dubai’s biggest lender Emirates NBD  concluded the acquisition of Turkey’s Denizbank from Russia’s state-owned Sberbank for $3.2 billion as part of a strategy to establish itself as a leading bank in the Middle East, North Africa (MENA) and Turkey.

Egypt ambitions

Now, the bank has set its eyes on Egypt, one of the largest markets in the Middle East, and that promises huge potential for growth.

Emirates NBD has already confirmed the reports that the bank is in talks with the management team of Lebanon’s Blom Bank to buy its business in Egypt.

Central Bank of Egypt (CBE) has already approved the request to begin the due diligence process.

Earlier, CBE governor Tarek Amer said that the “Central Bank is fully committed to the rights of merged banks employees, including employees of the Lebanese Blom Bank in Egypt, and that the matter is the original responsibility of the Central Bank.”

The deal is expected to be completed within weeks, according to media reports.

ADCB’s UAE branch network

ACDB now wants to even down shutters on selected branches I the UAE that have become redundant following the acquisition of UNB.

Deepak Khullar, the group chief financial officer (CFO) of ADCB, said while addressing analysts that the bank has moved decisively to reduce the bank’s branch network to the pre-merger levels.

Talking on the overseas branches, Kevin Taylor, the Group Treasurer said, “We’re closing branches in Qatar, Kuwait and China now. The reason that we’ve chosen to be UAE centric is a function of the experience of the management team in the bank.”

Deals with Israeli banks

FAB and Emirates NBD have signed memorandum of understanding (MoU) with Israel’s biggest bank Bank Hapoalim and another leading bank Bank Leumi Le-Israel to explore areas of mutual economic and commercial cooperation.

The MoU is expected to promote bilateral ties after the signing of a historic peace deal in Washington a few weeks ago.

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