Text size:

  • Small
  • Normal
  • Large

Banking stocks soar on consolidation rumours

Speculation of ADCB and NBAD merger lifts their shares, while optimism over the US bailout mounts.

Banking stocks soared yesterday after consolidation rumours and a possible bailout agreement in Washington boosted market confidence. Following months of falling liquidity through lower deposits and rising interbank interest rates, speculation that Abu Dhabi Commercial Bank (ADCB) and National Bank of Abu Dhabi (NBAD) were to join forces lifted their shares, which closed up 6.91 per cent and 4.29 per cent respectively.

Senior executives at both banks, however, said they were unaware of any possible merger talks. "We discussed [the rumours] at our management meeting and we received no instructions from the board or the higher authorities," said Abdullah Salah Abdul Rahim, the chief operating officer of NBAD. "We have no information at all about a merger." Eirvin Knox, the chief executive of ADCB, said: "I have no information on this. I am not aware of anything that is happening."

However, traders said some form of consolidation now looked inevitable since the credit crunch had begun to affect the GCC. Mortgage lending is being cut, the Emirates interbank offered rate (Eibor) has been increasing since June and the Central Bank has had to step in to provide banks with a Dh50 billion (US$13.6bn) loan - all signs of a severe credit crunch. Yesterday, the Eibor increased to 3.96 per cent, compared to 3.76 per cent last Thursday, a huge increase that takes it to the highest level since early this year.

"There are some rumours that the Abu Dhabi market will witness some mergers and acquisitions in the banking and real estate sectors," said Ahmed Hamdy, the senior relationship manager at Prime Emirates. "ADCB is one of the banks likely to be involved," he said. The rumours boosted the entire banking sector: Emirates NBD rose 4.79 per cent, Dubai Islamic Bank 5.63 per cent and First Gulf Bank 2.17 per cent. The banking indexes on the Dubai Financial Market and Abu Dhabi Securities Exchange rose by 3.46 and 2.60 per cent respectively.

* With Reuters afoxwell@thenational.ae

Back to the top

More articles

Editor's Picks

 The Greens, villas: Q1 no change. 3BR - Dh210-250,000. 4BR - Dh210-260,000. 5BR - Dh220-300,000. Q1 2013-Q1 2014 5% rise. Pawan Singh / The National

In pictures: Where Dubai rents have risen and fallen, Q1 2014

Find out how rental prices in the prime locations in Dubai have altered during the first three months of the year and the current rates you will pay according to data provided by Asteco.

 Miele coffee maker making Cappuccino at Miele Gallery in Sama Tower in Dubai. The cost of this coffee maker is around Dh 17,000. Pawan Singh / The National

Space-age coffee comes at a price from Miele

Miele have taken the coffee machine to a new level with its Dh17,000 offering that is built into your kitchen.

 The bridge of Seajacks Hydra, as the wind farm installation vessel undergoes finishing touches and testing works at Lamprell’s Hamriyah facility in Sharjah before its planned delivery on June 2, 2014. Jeffrey E Biteng / The National

In pictures: Building the Seajacks Hydra

The Seajacks Hydra, a wind farm installation vessel, is undergoing finishing touches and testing works at Lamprell’s Hamriyah facility in Sharjah before its planned delivery on June 2, 2014.

 The Wind, Energy, Technology and Environment Exhibition takes place from April 14 to April 16. Above, the Dewa showroom during last year’s Wetex. Jaime Puebla / The National

April corporate and economic calendar for the UAE and overseas

From Cityscape to Wetex to stock-market holidays to nations reporting first-quarter GDP figures, here is our helpful calendar of April's business events in the UAE and internationally.

 The rush of new supply of hotel rooms pushed Dubai occupancy rates down to 87 per cent. Sarah Dea / The National

Dubai hotel room rates rise 10 per cent

The rush of new supply pushed occupancy rates down to 87 per cent, a dip of 2.6 per cent from the previous year. Winter months are the strongest for Dubai hotels, with occupancy and prices falling to half their peaks by July.

 Get the latest information on credit cards, bank accounts and loan products in the UAE. Mark Lennihan / AP Photo

Rates report: Latest on UAE loans, accounts and credit cards

Souqamal.com brings you the latest interest rates on banking products in the UAE.


To add your event to The National listings, click here

Get the most from The National