Credit Suisse, UBS Said to Work With Abu Dhabi Banks on Deal

  • Credit Suisse advising NBAD on combination, UBS said with FGB
  • Two banks scaled back investment banking in Gulf after crisis

Credit Suisse Group AG and UBS Group AG, which have scaled back from the Gulf since the financial crisis, are advising on the potential merger of Abu Dhabi’s two largest banks, according to people with knowledge of the matter.

Credit Suisse is advising National Bank of Abu Dhabi PJSC while UBS is working with First Gulf Bank PJSC, the people said, asking not to be identified because the information is private. Saad Benani is Credit Suisse’s head of investment banking in the region, while Alberto Palombi is his counterpart at UBS. The four banks declined to comment.

National Bank of Abu Dhabi and First Gulf Bank said they’re in talks to merge in a deal that would create the largest lender by assets in the Middle East. A working group of senior executives from each bank is reviewing the commercial, structural and legal aspects of the deal, according to a statement on Sunday. Bloomberg News was first to report that the two banks were considering a potential combination on June 16.

Both lenders surged on Sunday, adding more than $4 billion of value to Abu Dhabi banking stocks. NBAD rose 15 percent on Sunday and gained 3.7 percent as of 12:10p.m. in Abu Dhabi on Monday. FGB declined 2.7 percent after a 11.5 percent surge on Sunday.

Shrinking Presence

Compared with the likes of regional heavyweights such as HSBC Holdings Plc and Deutsche Bank AG the Swiss banks -- both based in Zurich -- operate relatively small investment banking teams in Dubai. Both reduced their presence in the emirate as deal flow dwindled in the aftermath of the global financial crisis.

Credit Suisse trimmed its investment banking business in Dubai four years ago to focus on Qatar and Saudi Arabia, people familiar said at the time. Qatar Investment Authority -- the country’s sovereign wealth fund -- is Credit Suisse’s second-largest investor with a 5.1 percent stake, according to data compiled by Bloomberg.

UBS cut about 10 investment banking positions in Dubai and relocated executives to Switzerland in 2013, people with knowledge of the matter said at the time.

Globally, both banks have also been reducing the emphasis on investment banking. At UBS, Chief Executive Officer Sergio Ermotti has eliminated thousands of jobs to focus on wealth management after taking over in 2011. Credit Suisse CEO Tidjane Thiam in March unveiled a second restructuring round, deepening cost cuts and eliminating thousands of jobs to focus on an expansion in wealth management.

M&A Deals

Merger and acquisition deals in the Middle East and Africa have risen 13 percent this year to $37.9 billion, according to data compiled by Bloomberg. JPMorgan Chase & Co. is the region’s biggest adviser for M&A, working on $1.2 billion of deals, while Citigroup Inc. and BNP Paribas SA rank second and third. Credit Suisse and UBS are joint 26th with 17 other banks, according to the data.

The NBAD and FGB deal would be the United Arab Emirate’s first major banking merger in almost a decade after National Bank of Dubai and Emirates Bank International combined to create Emirates NBD PJSC in 2007.

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