Abu Dhabi: The merger of First Gulf Bank (FGB) with National Bank of Abu Dhabi (NBAD) will lead to a stronger financial institution that can compete at the international level and capture trade that is coming to the UAE, the chief executive officer of First Gulf Bank said in Abu Dhabi.
Speaking to the media after the annual general meeting during which the bank got shareholder approval for the merger, Andre Sayegh said the purpose of the merger is to add value and create a stronger financial institution.
“The purpose of the merger is to add value for the country, for the banking sector as a whole and for shareholders as well. We are going to see a stronger financial institution that can compete at the global scale and bring more revenue,” he said.
Despite severe economic cycles in the last seventeen years, the bank emerged stronger year after year with profitability, he said.
“There is a model and strong fundamentals which the bank is using and this will be transported to the new institution. There is a lot of value to be added from the other institution as well so both of them really complement each other in different products and segments.”
When asked about the cost savings due to the merger, chief financial officer Karim Karoui said there will be cost savings of Dh500 million due to the merger and they will try to make it better when the merger becomes effective at the end of the first quarter.
He said Dh600 million is the integration cost and they will revisit once they come closer to the merger.
On manpower reduction, Sayegh said it is too early to decide. “The manpower in not an issue, there is duplication in the system, there is duplication in the products, duplication in other expenses, like cars, furniture. We exaggerated the issue of human.”
In July last year, the UAE government announced the merger of FGB and National Bank of Abu Dhabi. The merger to be effective at the end of first quarter will create the largest bank in the Middle East and North Africa, with Dh642 billion in total assets.
Upon the effective date of the merger, assets and liabilities of FGB will be automatically vested in NBAD in consideration for the issue of shares in the new NBAD entity to existing FGB shareholders. In addition, all FGB shares will be de-listed from the Abu Dhabi Securities Exchange.
At the Annual General Meeting on Tuesday, FGB shareholders approved the distribution of 100 per cent cash dividends for registered, entitled shareholders for the financial year ended 31 December 2016.
First Gulf Bank (FGB) said last month that its net profit in 2016 rose marginally by 0.3 per cent, marking its 17th consecutive year of consistent growth in profitability despite challenging conditions.
FGB’s net profit came in at Dh6.03 billion in 2016, compared to Dh6.01 billion in 2015. Full year revenues came in at Dh9.58 billion, up 2 per cent year-on-year.
The bank’s total assets were at Dh245.1 billion, while loans and advances came in at Dh156.7 billion and customer deposits at Dh149.2 billion.