The UAE-based Sharia-compliant lender Abu Dhabi Islamic Bank is reportedly assessing all strategic business options including a potential merger with smaller lenders.
The second-largest Islamic bank of the country is currently in discussions with its financial advisers, reported Bloomberg citing unnamed sources familiar with the matter.
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According to the sources, the bank is exploring options to combine with a larger lender or acquire a smaller bank.
However, the formal transaction procedure is yet to start.
Abu Dhabi Islamic Bank merger: Background
The move comes at a time when several financial institutions in the Middle-East region are pursuing consolidation of their operations.
Last month, three UAE-based lenders Abu Dhabi Commercial Bank, Union National Bank and Al Hilal Bank signed merger deal. The combined lender will have assets of around $114bn.
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By GlobalDataWith a market value of $4.2bn, Abu Dhabi Islamic Bank has around $34bn in assets. In November last year, the bank received the approval to enable international entities to acquire up to 25% of its shares.
Earlier this month, Abu Dhabi Islamic Bank reported a net profit of $680.61m in 2018, an increase of 8.7% year-on-year.
With a country inhabited by nine million people, the UAE has more than 50 operating banks. Abu Dhabi Islamic Bank’s move is anticipated to put additional pressure on the smaller lenders in the country.
