Bankers predict that new mergers in the banking sector will appear on the market in order to achieve three main goals: increasing competitiveness, meeting economic challenges and compliance with international capital adequacy standards, in particular Basel III standards.
They pointed out that potential mergers in the sector are mainly aimed at rationalizing expenditures by lowering costs and expenses and increasing margins on a market full of fierce competition.
Wissam Fattouh, secretary of the Association of Arab Banks, said the banking sector in the Gulf has witnessed many mergers in recent years, indicating that the merger policy increases the attractiveness of the financial market for investors.
Fattouh confirmed that the latest merger in Saudi banks, for example between SABB and the first, is a new entity, the third largest bank in Saudi Arabia.
"In the 1990s there were two cases in Saudi Arabia, the first in 1997, when Saudi Banque Saudi Arabia and United Commercial Bank merged to establish UGB. In 1999, the Saudi American Bank took over United Saudi Bank, Finance."
Fattouh explained that the United Arab Emirates were witnesses of the first merger in 2007. Through the National Bank of Dubai and the Dubai Emirates Bank in the unit bearing the Emirates NBD name.
"In April 2017, legal requirements regarding the merger of First Gulf Bank with the National Bank of Abu Dhabi (ADB), the first largest bank in the United Arab Emirates and the second largest Arab bank, were topped up with assets worth 188 billion USD at the end the second quarter of 2018, it represents a market share of 25 per cent of UAE banking sector assets. "
Fattouh said that ADCB recently announced a merger talk with Union National Bank and Al Hilal Bank, which could lead to the establishment of the fifth largest bank in the Gulf with assets worth 415 billion dirhams ($ 113 billion).
The Abu Dhabi government holds a majority stake in Abu Dhabi Commercial Bank, the second largest bank in the emirate and the National Union, and Islamic Bank Abu Dhabi is fully owned by the Abu Dhabi government.
Fattouh stressed that the leadership in banking integration in the Persian Gulf region is concentrated in Bahrain, where four mergers took place in 2009-2013. Shamil Bank and Ithmaar merged at the end of 2009, while Bahrain Islamic Bank and Al Salam Bank merged at the end of August 2011.
"In October 2012, Ithmaar merged with First Leasing Bank, and the merger was confirmed in Bahrain in 2013, When Elaf and Bait Capital Management and Capivest merged, creating a unified banking unit under the umbrella of Elaf Bank.
The secretary of the Union of Arab Banks pointed out that the merger in Bahrain is the reason why it is the main financial and banking center in the Persian Gulf region, with about 100 banks and financial institutions operating locally, regionally and internationally.
Bahliński Ahli United Bank is in talks with the Kuwaiti Financial House, which may become the first cross-border banking alliance of the Persian Gulf in recent years, leading to a strong entity with a total value of USD 92.6 billion, he said. He said that the National Bank of Oman announced the end of July 2018. Starting negotiations on a possible merger with Bank Dhofar, both listed on the Muscat securities market, and if the merger ends, the total assets of the new entity will amount to about 20 billion dollars.
The merger aims to establish large banking entities that can compete on a regional and global scale, meet economic challenges, comply with international standards, in particular Basel III standards, standards for combating terrorism financing and money laundering and the International Accounting Standard, and contribute to rationalization of expenses by reducing costs and expenses. Increasing profit margins and improving the efficiency and reliability of the banking sector, as well as exchange of banking expertise between two previous administrations, extending financing and investment opportunities, and getting out of difficult investments, in addition to lowering costs. Shareholders T.
"Banks in the Gulf are looking for opportunities to connect with each other, be it in the state of the Persian Gulf, or in combination with banks in other countries of the Gulf," said Adnan Yousef, president of the Bahrain Banking Association, president of Al Baraka Bank.
Adnan expected the upcoming period to witness a merger in Kuwait between the Kuwait Financial Bank and other financial institutions that may be located outside of Kuwait.
He emphasized that the merger of banks with large financial institutions in the Gulf states provides great strength for financial institutions, indicating that the merger consists in crossing financial ideas from financial knowledge in a new financial and old institution, as well as the capital of the new financial institution.
The chairman of the Bank of Bahrain Association stated that there were strong mergers between its banks in the Gulf region, which contributed to the emergence of strong financial institutions competing globally and keeping up with the economic movement. "The Gulf states need strong financial institutions with huge capital, which increases their ability to finance major projects, for example in the petrochemical sector," he said.
He pointed out that central banks in the Gulf encourage the integration of banks, especially new financial institutions that connect with other institutions.
He pointed out that the growth of Gulf economies requires strong financial institutions that can provide services and products to economies that need financial institutions to keep up with this economic boom in the Gulf countries.
He added that Bahrain had witnessed the merger projects between the banks of Bahrain, but not on the scale that took place in the United Arab Emirates and Saudi Arabia.
For its part, said Osama Moin, Bahrain's investment advisor, Bahrain was a combination of Bahrain's Bank Handlowy and Kuwait's bank, which became Ahli United Bank, and began the recent takeover of small banks in Bahrain. "Small banks are not good for the region and it is important to integrate many of them to serve the development of the region," he said. He pointed out that small banks usually receive financing lines from international banks, but this financing is adapted to the size of these small banks and their capital, which can not be consistent with the size of development in the banking sector and projects in the Gulf that need large funds, prompted banks to comply with the policy. Merger or takeover to create strong financial institutions. He explained that small banks can not remain the same at the time of establishment, even if the development of good can not be consistent with the size of development in the region.