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ADCB buy makes sense for NBAD
Abu Dhabi Commercial Bank (ADCB) makes sense as an acquisition target for the National Bank of Abu Dhabi (NBAD), although it is one of several buyout targets that the bank could consider, NBAD's chief executive said on Monday.
When asked by Reuters if a merger between the two state-owned banks was under serious consideration, NBAD's Michael Tomalin said: "No, I don't think so."
However, he did say such a combination would make sense. "I do believe that is true," Tomalin said.
In February, Emirates Bank International and the National Bank of Dubai said they would merge at the behest of the ruler of Dubai, the second largest emirate after Abu Dhabi in the United Arab Emirates federation.
News of that merger triggered a rally in shares of both ADCB and NBAD, the UAE's largest lender by market value, on market speculation they could be the next merger candidates.
ADCB, the country's third-largest lender by market value, is up 20 % and NBAD is 32.8 % up since the beginning of the year.
Tomalin said the two banks would compliment one another as ADCB is stronger in retail banking and NBAD in commercial transactions.
Tomalin echoed other bank executives who said banking consolidation is necessary for Abu Dhabi.
"The top three banks control roughly 30 % of the market, which is low by international standards. You need large banks because economies of scale work in this business," he said.
Tomalin believes within two to three years that consolidation process will be under way.
"We want to be the acquirer," he said.
"ADCB is one possible play, one of perhaps 17 plays you can think about in terms of a consolidation plays. So I am not ruling anything out. I am not saying only ADCB is the only way forward for us. There are lots of other things we can do..." he said.
"All I am commenting on is the point that does ADCB make sense? Yes, It would make sense."
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