The success of the discussions on the merger of three banks in the Emirate of Abu Dhabi, Abu Dhabi Commercial, National Union and Al Hilal, will achieve several benefits and key objectives that will contribute to the implementation of Abu Dhabi Vision 2030, bankers and financial analysts said. .
They pointed out that the most important of these advantages is the reduction of the operating cost by between 30 and 40%, the establishment of a large banking entity in line with the development of the UAE, increasing the financing capacity to support the development projects, especially the huge in Abu Dhabi, as well as creating an Islamic window for the new entity, Which will raise the Bank's share in Islamic banking in the country, in addition to the possibility of expanding regionally and globally.
Analysts have played down the fears of redundancy and the banking skills that usually accompany any merger, especially in senior management, pointing out that these cadres are trained and have great experience and will be re-employed in the national economy with suitable opportunities.
Strong entities
Wadah Al-Taha, a financial analyst, said that mergers in all sectors are usually accompanied by several advantages, the most important of which are the establishment of strong and viable entities, regional and global expansion, especially the banking sector, which is the driving force of any growth process, and supports the strategic plans for the economy.
Al-Taha said that the expected merger will result in the fifth largest Gulf banking entity with assets of over $ 130 billion. This means increasing the financing capacity and support that can be provided to the Abu Dhabi Government's ambitious and ambitious projects, regional and Gulf expansion and competition with international banks.
He added that by adding Al Hilal Bank to the Islamic windows of Abu Dhabi Commercial Bank and National Union, the new entity will have a large Islamic window, which can acquire an important stake in the Islamic banking market inside and outside the country.
Al-Taha pointed to the existence of 22 national banks and 35 foreigners, considering that a large number does not match the ambition of the UAE in building global entities in all sectors.
Reduce your cost
For his part, said banking expert Ahmed Yousef, one of the most important benefits of the merger is expected to reduce the operational cost, and raise efficiency, rationalization of resources, in addition to providing a large and diverse financing opportunities.
He added that the announcement of the discussions yesterday, in the event of completion and success, comes in line with the vision of development initiated by the Emirate of Abu Dhabi for all its institutions and large companies, and it has more than a merger, at the level of companies or banks, the most recent successful experience to merge the banks «Abu Dhabi National» and «First Gulf».
The Abu Dhabi government has a majority stake in the three banks, making it easy to integrate into the Gulf's fifth-largest bank, a strong addition to the banking sector in the UAE.
Functional cadres
In the same context, a high-ranking banker, who declined to be named, played down the process of dispensing with professional staff as a result of the merger, especially in senior management. He said that there is a cost to any merger, including the removal of part of the employees, And rehabilitation, in addition to some losses in capital expenditures such as branches, technology and others.
He added that these cadres are highly trained and are distinguished banking competencies, so it is very easy to find other opportunities, which means re-employment in the national economy in other institutions and institutions need to be competent.
The bank pointed out that the general direction of the state is to raise the operational efficiency of the institutions and reduce the cost, and this was reflected in more than the merger of the past, most recently the banks «Abu Dhabi National» and «the first Gulf», which began positive results are evident in the form of strong financial results, and attend Global and clear, by virtue of solvency, and the reflection on the stock market, as the new entity created an abundance of securities traded and available to the public, which contributed to the increase in trading.
He pointed out that in the UAE more than 50 banks, and the population does not exceed 10 million, which means that there are a number of banks are no longer the market need, in light of the great technological development and ease of providing banking services, noting that the merger often Operational costs are reduced by between 30 and 40%.
- Consolidation allows the banking entity to expand regionally and globally
Advantages of interbank merger
1. Establishing a large banking entity that will keep abreast of the development of the UAE.
2. Increase financing capacity in support of large development projects.
3. Reducing operating costs in banks.
4. Creating an Islamic window capable of competing with a larger share in the market.
5. The possibility of regional expansion and competition of international banks.
22
A national bank and 35 foreigners, in the UAE.