Two major Abu Dhabi banks in merger talks

Two of Abu Dhabi’s largest banks have said they are in talks to merge, potentially sparking further rationalisation in the United Arab Emirates as the oil-rich region weathers the oil price slump.

State-owned National Bank of Abu Dhabi and First Gulf Bank, in which members of the ruling family have a significant interest, would surpass Qatar National Bank to become the region's largest lender.

“Each bank has formed a working group made up of senior executive management to review the commercial potential along with any legal and structural aspects of a merger or combination,” NBAD said on Sunday.

“At this time, there is no certainty that discussions between NBAD and FGB will result in a merger or combination.”

More mergers are expected between Middle Eastern banks if the planned $13 billion tie-up ends with a deal. The idea of merging FGB and NBAD to create a regional powerhouse with $172 billion of assets and $3 billion of net profit has been discussed by their state shareholders for about a month, sources said.

– Copyright The Financial Times Limited 2016