For as long as anyone can remember, the Middle East’s banks have been ripe for consolidation, yet large mergers have been few and far between.
Even the 2007 fusion of Emirates Bank International and National Bank of Dubai (to create ENBD) failed to trigger the expected wave of consolidations.
Now, 10 years on from the formation of ENBD, two of Abu Dhabi’s largest financial institutions, First Gulf Bank (FGB) and National Bank of Abu Dhabi (NBAD), are following in its footsteps.
The result of that merger is First Abu Dhabi Bank (FAB), a bank with Dh644 billion ($175 billion) in assets and a net profit of Dh8 billion, as of the end of September 2017. Although it has much still to prove, the bank has the potential to become a leading player not just in the Gulf but also internationally.
It had long been clear that Abu Dhabi’s banking sector was too densely populated. Perhaps the high oil price that benefited oil-rich Abu Dhabi for so long lulled its bankers into a fall sense of security, as opposed to their neighbours in Dubai, where banks had to be more innovative to generate returns.