Residential and commercial skyscrapers stand along the coastline in Abu Dhabi, United Arab Emirates, on Tuesday, April 10, 2018. Abu Dhabi National Oil Co. will issue its first competitive tender for partners to explore for and develop oil and natural gas as the government-owned producer seeks new ways to increase production in the United Arab Emirates. Photographer: Christopher Pike/Bloomberg
A proposed three-way bank merger in Abu Dhabi may lead to about a thousand jobs being cut, according to three people with knowledge of the matter.
Talks among Abu Dhabi Commercial Bank PJSC, Union National Bank PJSC and privately-held Al Hilal Bank are at an advanced stage, the people said on condition of anonymity because the topic is private. The lenders are working on issues such as valuation and are conducting due diligence, two of the people said.
No final agreements have been reached and the discussions may not result in a transaction, the people said. A combination of the two companies would create a lender with about $115 billion in assets. The potential tie-up would create the Gulf Cooperation Council’s fifth-largest bank.
ADCB declined to comment, while Union National Bank and Al Hilal didn’t respond to requests for comment.
Abu Dhabi, home to 6 percent of global oil reserves, has stepped up efforts to create leaner and more competitive financial institutions. There are almost 50 banks operating in the United Arab Emirates serving a population of about 9 million, compared with 28 lenders in Saudi Arabia catering to more than 30 million people.
The job cuts, however, may weigh on an already-subdued consumer demand in the non-oil economy, which is largely driven by expatriate workers. In the U.A.E., where residency is tightly linked to employment, job losses often lead foreign workers to move back to their home countries along with their families.
ADCB and UNB employ about 7,000 people, according to official data. Al Hilal has about 1,500 employees, according to an April 2018 interview with its chief executive officer by the Dubai-based Arabian Business magazine.
Job losses from last year’s merger between National Bank of Abu Dhabi and First Gulf Bank, which created First Abu Dhabi Bank PJSC, were never officially disclosed.
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