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FAB’s exploration of Standard Chartered highlights the growing ambitions of Middle Eastern banks. It also demonstrates Abu Dhabi’s desire to play a bigger role on the international stage.
“FAB’s consideration of merging with an international bank of Standard Chartered’s size demonstrates the ambitions of the Abu Dhabi company to expand its financial services into new geographic regions,” said Abu Dhabi-based Mohammad Ali Yassin, independent Capital market advisors and investors. This interest also “underscores its thought process of seeking to grow exponentially rather than incrementally beyond the scale of local and regional competition.”
FAB was created when Abu Dhabi merged its two largest banks, National Bank of Abu Dhabi and First Gulf Bank, in 2016. The main purpose of the new entity is to drive economic growth in the UAE by providing loans to state-owned entities and the domestic private sector. FGB is primarily focused on consumer banking and credit cards, while NBAD is bigger in wholesale banking and has expanded internationally.
About three-quarters of FAB’s revenue comes from the UAE. The bank, which employs about 7,000 people and generates about 43 percent of its revenue from investment banking, was involved in several high-profile deals in the Gulf region last year in a string of dealmaking and initial public offerings.
FAB acquired the Egyptian arm of Audi Bank in 2021 but has not yet made any other major acquisitions. Last year, it withdrew its billion-dollar takeover of investment bank EFG-Hermes after Egypt faced lengthy regulatory delays.
Banks in the Bay Area are now looking further afield. The National Bank of Saudi Arabia became one of Credit Suisse’s largest shareholders following an investment late last year.
European banks like Standard Chartered have long been used to backing wealthy Middle Eastern investors. Credit Suisse already counts Saudi conglomerate Olayan Group and Qatar Investment Authority among its major investors. Funds in the region also stepped in during the 2008 financial crisis, investing billions of dollars in banks including Barclays, Credit Suisse and Citigroup.
For FAB, its announcement on Thursday meant it was excluded from making an offer to Standard Chartered for the next six months, unless in certain circumstances, including a third party announcing its intention to make an offer.
Yassin said it made sense for Abu Dhabi Bank to stick with another ambitious deal.
“The market would benefit more from such deals if they happen, rather than focusing on local mergers in the UAE, which would not provide FAB with the same growth benefits as international mergers,” he said.
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