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FGB And NBAD Boards Recommend Merger To Create The Largest Bank In The Middle East And North Africa Region
(3 July 2016)


First Gulf Bank PJSC (FGB) and National Bank of Abu Dhabi PJSC (NBAD) announce today that their boards of directors have voted unanimously to recommend to shareholders a merger of the two Abu Dhabi-listed banks.

The proposed merger will create a bank with the financial strength, expertise, and global network to support the UAE’s economic ambitions at home and drive the country’s growing international business relationships.

The combined bank will be the largest bank in the Middle East and North Africa region, with AED642 billion (US$175 billion)1 of assets and a combined market capitalisation of approximately AED106.9 billion (US$29.1 billion)3. It will be the leading financial institution in the United Arab Emirates (UAE), with a 26 percent4 share of outstanding loans, and will operate an international network of branches and offices spanning 19 countries. Both entities will continue to operate independently until the merger becomes effective, which is expected in the first quarter of 2017.

The proposed transaction is a merger of equals and will be executed through a share swap, with FGB shareholders receiving 1.254 NBAD shares for each FGB share they hold. The exchange ratio implies a discount to FGB's shareholders of 3.9 percent based on closing share prices on June 30, 2016, and a discount of 12.2 percent to the three months’ average pre-leak share price as on June 16, 2016.

Following the issue of the new NBAD shares, FGB shareholders will own approximately 52 percent of the combined bank and NBAD shareholders will own approximately 48 percent. The Government of Abu Dhabi and related entities will own approximately 37 percent.

On the effective date of the merger, FGB shares will be delisted from the Abu Dhabi Securities Exchange. 
The combined bank will retain NBAD’s legal registrations and the brand name of “National Bank of Abu Dhabi”. Its board will include four nominated directors of FGB and four nominated directors of NBAD. His Highness Sheikh Tahnoon Bin Zayed Al Nahyan, who is currently Chairman of FGB, is the Chairman designate. His Excellency Nasser Ahmed Alsowaidi, who is currently Chairman of NBAD, is the Vice Chairman designate, and Mr. Abdulhamid M. Saeed, who is currently Board Member and Managing Director of FGB, is the Chief Executive Officer designate for the combined bank. New board and management will assume the new roles when merger becomes effective; until then Mr Andre Sayegh and Mr Alex Thursby will continue to lead their banks independently as Group Chief Executive Officers of FGB and NBAD respectively.

His Highness Sheikh Tahnoon Bin Zayed Al Nahyan, Chairman of FGB, said:
“The new, well-balanced bank will be an engine of UAE growth, driving further investment and economic diversification, and advancing the ambitions of entrepreneurs and the people they employ. The bank will have the strength and expertise to support the development of the UAE’s private sector, from SMEs to large companies gathering strength to expand beyond their national borders. It is well positioned to be the strategic banking partner to the government and its agencies.”

His Excellency Nasser Ahmed Alsowaidi, Chairman of NBAD, said: 
"Now, more than ever, the UAE will benefit from a strong, financial partner with the capacity to meet new challenges, drive domestic growth, and support the country’s ever-greater connections to the global economy. Expansion across fast growing emerging markets presents a vast business opportunity for our customers and for us, as a larger, stronger, combined bank. We will have the capital, expertise and international networks to be the preferred financial partner for anyone doing business along the West-East corridor. And, we will act as the primary link for businesses and governments that want to access regional and global capital markets.”

Mr. Abdulhamid M. Saeed, Chief Executive Officer Designate, said:
“FGB and NBAD are two of the UAE’s most successful banks with proven growth strategies. They are highly complementary businesses, each with strong and experienced leadership teams. The new bank will draw on these strengths to provide excellent service to our customers and take advantage of the opportunities we see in our home market and internationally.”

The boards of FGB and NBAD believe that the merger offers significant benefits to customers and investors. It results in the combination of two best-in-class consumer and wholesale businesses. FGB has a market-leading consumer banking franchise, with one of the strongest credit card offerings in the UAE and a long-standing National Housing Loan programme run for the Abu Dhabi government. NBAD is a leader in the UAE in wholesale banking and capital markets advisory with strong international connectivity.

The combined bank will be well-diversified, with loans to the corporate sector representing 52 percent2 of the total loan book, loans to the retail sector accounting for 26 percent2, and loans to the government sector representing 22 percent.2 It will have presence in 19 countries, and be well positioned in key financial centres including Singapore, Hong Kong, Geneva, London and Washington DC.

Economies of scale will help maintain a lean and efficiently run organisation. The merger is expected to deliver cost synergies of approximately AED500 million (US$136 million) annually. Cost benefits are expected to be realised over three years, and the one-time integration costs are expected at approximately AED600 million (US$163 million). The combined bank will offer the potential for revenue synergies with enhanced product suite of banking products and services across a larger, combined platform.

Furthermore, the combined bank will have the capital strength and strong core liquidity to pursue a range of high growth opportunities. These include opportunities in home market, supporting UAE corporates with international ambitions, leveraging an enhanced technology platform, more effectively using the expanded distribution capabilities and increasing wealth management cross-selling activity.

The bank’s new leadership is committed to nurturing the talent needed to deliver the highest quality service and operating best-in-class governance. At the top of its agenda is the combination of two successful groups of employees into a unified, customer driven culture, based on the shared values of enterprise, teamwork, empowerment and accountability. The bank will benefit from a strong pool of talent, and will strive to remain the employer of choice in the sector through effective programmes in employee engagement, reward and development. Attracting and developing high-performing UAE nationals is a central priority.

The merger is subject to a number of conditions, including the approval of the merger by at least 75 per cent by value of the shares represented at quorate general assembly meetings of FGB and NBAD. The merger is also subject to receipt of all required regulatory approvals

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