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Abu Dhabi, UAESaturday 20 October 2018

Sharjah lenders say they are not engaged in talks for a three-way merger 

Reports suggested that UAB and InvestBank are in initial talks with BoS to create a lender with Dh66.2bn in combined assets

United Arab Bank  and InvestBank denied reports they are are in talks to merge with Bank of Sharjah. Pawan Singh / The National
United Arab Bank  and InvestBank denied reports they are are in talks to merge with Bank of Sharjah. Pawan Singh / The National

Abu Dhabi-listed United Arab Bank and InvestBank are not engaged in talks with Bank of Sharjah for a three-way merger that would create a lender with Dh66.2bn in assets in the northern emirate.

The banks denied media reports which suggested they are at an initial stage of engagement to combine their balance sheet with BoS, a deal driven by the government of Sharjah, which owns a stake in the Sharjah-headquartered lender. The report citing un-named sources said that JPMorgan is advising BoS on the potential deal.

The reports in the media “related to the commencement of negotiations regarding a potential merger...UAB hereby denies the news and confirms its invalidity,” the lender said in a regulatory filing to Abu Dhabi Securities Exchange.

InvestBank, also denied the news report by Reuters in a separate disclosure to Abu Dhabi Bourse, while BoS said the bank “does not comment on rumours”.

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Read more:

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The banking and financial sector in the UAE, the region’s second-biggest economy, is going through a wave of consolidation, especially in Abu Dhabi, which has revamped its economy, merging state-backed companies, including two of its main investment arms.

The drive to create more efficient entities amid tougher economic conditions has also led to three other lenders Abu Dhabi Commercial Bank, Union National Bank and sharia-compliant Al Hilal Bank to pursue talks to combine their balance sheets.

The move to combine the three banks follows Abu Dhabi's biggest banking merger deal last year when National Bank of Abu Dhabi and First Gulf Bank combined their balance sheets to create First Abu Dhabi Bank, a $188bn banking powerhouse in the UAE.

Banking competition in the UAE – where 60 banks serve a population of nine million – has intensified in recent years as lending slowed in the wake of a three year oil slump and slower economic conditions. Lenders are increasingly looking to gain scale to get involved in big-ticket financing as they move away from smaller business, whose default rates are typically higher, Moody’s Investors Service said in a recent note.