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Asset management Economy

Invest bank bailout signals sector restructuring, mergers

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The UAE has 50 commercial banks including 22 local lenders, a number seen as too high in a country of about 9.5 million people.

Tuesday 08, January 2019

Smaller lenders in the UAE are facing regulatory pressure to merge after the fallout from a property downturn forced the state to lead a bailout of Invest Bank last month.

The Sharjah Government proposed to buy Invest Bank shares for just AED 0.70 ($0.19) each, against the last traded price of AED 2.40, after the central bank ordered it to take losses that wiped out its capital base.

Following the successful consolidation of two of the UAE's biggest lenders, First Gulf Bank and National Bank of Abu Dhabi to form First Abu Dhabi Bank (FAB), three more lenders have reached an advanced stage in talks for a possible merger.

According to Fitch Ratings, smaller banks in the UAE, mostly family-owned, have lost market share to the top four lenders, which now control around 65 per cent of banking sector loans.

Saudi Arabia, which has a population of 32 million, has 12 banks and is set to lose two of those if announced mergers are successfully concluded, reported Reuters.

TAGS : UAE Banks, mergers, Invest Bank, CBUAE, FAB, Sharjah Government

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