Abu Dhabi banks deny merger talks, shares fall

Three Abu Dhabi banks denied they were in merger talks on Sunday, sending their share prices lower as investor hopes of a shake-up in the banking sector were dashed.

Abu Dhabi Commercial Bank (ADCB), Union National Bank (UNB) and Abu Dhabi Islamic Bank in separate statements to the bourse each denied they were involved in merger plans.

Shares in the lenders had been suspended earlier on Sunday until they responded to a Bloomberg news story published last week, an exchange source told Reuters.

The story cited unnamed sources as saying the Abu Dhabi government was weighing a merger between ADCB and UNB, and another between ADIB and Al Hilal Bank. Al Hilal is not listed.

Rumours

Rumours have been circulating in recent months of more possible banking tie-ups after Abu Dhabi's two largest banks,
National Bank of Abu Dhabi (NBAD) and First Gulf Bank (FGB), agreed a merger that is expected to be completed in the first quarter of 2017.

Crowded with more than 50 banks, the UAE banking sector has been squeezed over the past two years by lower government spending and stricter global capital rules.

Shares in ADCB, UNB and ADIB jumped last week on renewed speculation about possible mergers.

After the release of statements by the banks, trading on their shares resumed.

Shares in ADCB closed 2.65 percent lower at 5.88 dirhams, while shares in UNB fell 5.16 percent to 4.23 dirhams. ADIB's shares closed 0.83 percent lower at 3.57 dirhams.