DUBAI: In April 2022, First Abu Dhabi Bank (FAB) PJSC pulled a US$1bil (RM4.4bil) deal to acquire Egypt’s biggest investment bank.
Just months later, it set its sights much higher.
FAB, which has grown into the Middle East’s largest bank by assets since it was created through a merger about six years ago, said last Thursday it explored a bid for Standard Chartered Plc, but that it’s no longer considering an offer for the London-based lender.
A successful deal would have catapulted the regional champion into an emerging markets banking giant with more than US$1 trillion (RM4.4 trillion) in assets – about a third of the size of HSBC Holdings Plc – and would have been the biggest foreign takeover by a company in the Gulf region.
FAB’s exploration of Standard Chartered highlights the growing ambition of Middle East lenders and the wealthy oil-rich nations that back them. It also showcases Abu Dhabi’s aspirations to play a bigger role on the international stage and would have marked a turning point in chief executive officer (CEO) Hana Al Rostamani’s two-year reign.
“The fact that FAB have looked at merging with an international bank of the size of Standard Chartered demonstrates the ambition of Abu Dhabi Inc in growing its financial services reach to new geographic territories,” said Mohammed Ali Yasin, an Abu Dhabi-based, independent capital markets adviser and investor.,
The interest also “emphasises its thought process of looking to grow exponentially rather than gradually to leap in size over local and regional competition.”
Shares in FAB closed down 2.3% last Friday, giving the lender a US$50.2bil (RM221.1bil) market value, roughly double that of Standard Chartered.
While any deal would have been complicated and ambitious given the difference in size and scale of the two banks, FAB has the backing of some of the world’s biggest investors, which it may have needed to turn to to get a deal done.
“A takeover would not have been possible with the current balance sheet,” said Shabbir Malik, a Dubai-based research analyst covering UAE and Saudi financials for EFG-Hermes.
“They would have had to do a rights issue and key shareholders Mubadala and the Abu Dhabi ruling family would have had to participate.”Abu Dhabi manages more than US$1 trillion (RM4.4 trillion) of sovereign wealth and is home to funds such as ADQ, the Abu Dhabi Investment Authority and Mubadala Investment Co – which owns about half of FAB along with the emirate’s ruling Al Nahyan family – the world’s richest with a US$300bil (RM1.32 trillion) fortune.
Buoyed with cash from last year’s commodity boom and spurred on by equally ambitious neighbours such as Qatar and Saudi Arabia, the United Arab Emirates – home to about 6% of the world’s proven oil reserves – is investing billions of dollars to diversify its economy away from crude.,