First Abu Dhabi Bank (FAB), the largest lender in the United Arab Emirates (UAE), has officially denied recent rumours of a potential takeover bid for Standard Chartered. The bank stated that it had evaluated the possibility of making an offer, but ultimately abandoned the move.
In regulatory filings to the Abu Dhabi Securities Exchange and the Stock Exchange of Hong Kong, FAB stated that it was not currently evaluating a potential offer for Standard Chartered. The bank is currently in a “cooling period” and is bound by regulatory restrictions set by the UK and Hong Kong.
However, FAB stated that it reserves the right to announce a possible offer for Standard Chartered within the next six months, based on various factors such as agreement from the board of Standard Chartered, third-party announcements, and any material changes in circumstances.
Despite the denial, Standard Chartered’s shares saw a significant increase, with a rise of 11% in trading on Thursday, due to the speculation of a renewed takeover bid. With over $864 billion in assets at the end of September 2022, Standard Chartered has seen a 35% increase in its shares over the past year.
If FAB had pursued a successful takeover bid, it would have become one of the top ten banks globally by market value, joining the ranks of major banks such as JP Morgan Chase, HSBC, and Citigroup.
Investment bank EFG Hermes noted that, although the deal is currently off the table, the speculation indicates that FAB is serious about its inorganic growth and is willing to make moves when the opportunity arises. A merger between the two banks would have created a formidable entity, with FAB’s primarily Middle East and North Africa-focused business complementing Standard Chartered’s key market in Asia.
FAB has seen significant growth in recent years, expanding beyond the UAE market and making a number of mergers and acquisitions. In 2021, the bank completed a merger of Bank Audi Egypt with its operations in the country and opened a representative office in Iraq. FAB also made a non-binding offer to purchase a majority stake in Egypt’s largest investment bank, EFG Hermes, but withdrew the bid due to global market uncertainty at the time.
With the UAE’s economy expanding at a rapid pace and Gulf lenders flush with cash, FAB and other regional banks are looking beyond their local markets and expanding their reach both regionally and internationally. In October, Saudi National Bank announced a $1.5 billion investment in troubled lender Credit Suisse, while in 2019, Emirates NBD, Dubai’s largest lender, acquired Turkey’s fifth-largest bank, Denizbank, for $2.8 billion.
FAB reported a 7% increase in net profit to a record $3.65 billion in 2022, driven by higher interest income and strong performance of its core business.
Pan Finance is a print journal and news website providing worldwide intelligence on finance, economics and global commerce. Known for our in-depth analysis and opinion pieces from esteemed academics and celebrated professionals; our readership consists of senior decision makers from across the globe.