Abu Dhabi, UAEMonday 21 October 2019

Dubai CBD denies M&A activity saying it is focused on growth

Reports suggested that shareholders of the bank may opt to sell stake to encourage CBD merger with other lenders

Commercial Bank of Dubai reported a 28.2 per cent increase in its third quarter net profit. Bloomberg
Commercial Bank of Dubai reported a 28.2 per cent increase in its third quarter net profit. Bloomberg

Commercial Bank of Dubai, which counts sovereign wealth fund Investment Corporation of Dubai as its biggest shareholder, dismissed reports it is considering a merger or acquisition as it remains focused on its own growth plans, the lender said.

“The board of CBD would like to clarify that there are no discussions whatsoever concerning merger, acquisition or activity of similar nature,” the bank said in a regulatory filing to the Dubai Financial Market, where its shares are traded.

“[The] board and management are fully committed to the successful execution of the approved strategy, which has resulted in strong results for 2018 and the first quarter of this year.”

The clarification from the Dubai-headquartered lender follows a Bloomberg report that Al Futtaim Group, which is the second-biggest individual shareholder in the bank with 10.5 per cent, is weighing options for the lender, including selling its stake. The family-owned holding company may also encourage the possibility of merging CBD with another institution, the report said, citing unnamed people familiar with the matter.

Abdulla Hamad Al Futtaim, the chairman of the holding company, controls about 7 per cent of CBD shares, according to stock exchange data.

The banking sector of the six-member economic bloc of GCC is going through a wave of mergers and acquisitions. More than 20 financial institutions, with assets exceeding $1 trillion, are in various phases of merger talks. The UAE, the second-biggest Arab economy, is leading on consolidation with three mega-mergers in the last two years.

Dubai Islamic Bank, the top Islamic lender by assets, is the latest financial institution in the country to weigh a possible acquisition, of smaller rival Noor Bank. The potential tie-up follows Abu Dhabi Commercial Bank’s merger with Union National Bank, and takeover of Al Hilal Bank in Abu Dhabi as the Islamic arm of the merged entity.

National Bank of Abu Dhabi and First Gulf Bank in the emirate merged in 2017 to create First Abu Dhabi Bank, the largest lender in the country by assets.

Updated: May 29, 2019 04:21 PM