NBAD, FGB boards approve merger plan

National Bank of Abu Dhabi (NBAD) and First Gulf Bank (FGB) announced on Sunday that their boards of directors have unanimously approved a merger of the two Abu Dhabi-listed lenders.

The new combined entity, which will retain NBAD’s legal registrations and  brand name, will become the largest bank in the MENA region with assets of AED 642 billion ($175 billion), the lenders said in a joint bourse statement. The merged bank's combined market capitalization is estimated at AED 106.9 billion ($29 billion).

The merger is expected in the first quarter of 2017 and is still subject to shareholder approval. The deal will be executed through a share swap, with FGB shareholders receiving 1.254 NBAD shares for each FGB share they hold.

“The exchange ratio implies a discount to FGB's shareholders of 3.9 percent based on closing share prices on June 30, 2016, and a discount of 12.2 percent to the three months’ average pre-leak share price as on June 16, 2016,” the statement said.

Following the issue of the new NBAD shares, FGB shareholders will own approximately 52 percent of the combined bank and NBAD shareholders will own around 48 percent.

The Abu Dhabi government and related entities will own approximately 37 percent, it added.

On the date of the merger, FGB shares will be delisted from the Abu Dhabi Securities Exchange.

The board of the new bank will include four nominated directors of FGB and four nominated directors of NBAD. The bank will operate an international network of branches and offices spanning 19 countries, the statement said.

Sheikh Tahnoon Bin Zayed Al Nahyan, current chairman of FGB, will be the chairman designate. Nasser Ahmed Alsowaidi, current chairman of NBAD, will be vice-chairman designate. Abdulhamid Saeed, current managing director of FGB, will be the CEO designate for the combined bank. 

Write to Nadeshda Zareen at nadeshda.zareen@argaamplus.com