Mergers and Acquisitions Case Study: NBAD and First Gulf Bank Analysis

This case study examines the merger and acquisition of the National Bank of Abu Dhabi (NBAD) and First Gulf Bank (FGB). It defines mergers and acquisitions, providing context on the consolidation of these two major UAE banks. The document details the historical background, including the merger date and the formation of First Abu Dhabi Bank (FAB), highlighting its position as a leading financial institution in the MENA region. The study outlines the working mechanisms within the UAE banking sector, including the roles of the central bank, payment systems, and wage protection systems. It also covers the services offered by the merged entity, recent developments, and statistical data such as deposit and loan increases, cost reductions, and market capitalization. The conclusion emphasizes the success of the merger, its impact on revenue generation, and its influence on the banking sector, including increased assets and investor appeal. References to relevant sources are also included.

Mergers and Acquisitions: A case study form NBAD and First Gulf Bank

Introduction
In this present paper, we will discuss the merger and acquisition case study of NBAD and first
gulf bank. The paper also describes the definition of merger and acquisition, the historical
background of the case, working mechanism, service providers, a recent development, and
statistical data related to the merger and acquisition.
Definition of merger and acquisition
The merger and acquisition are mainly defined as the consolidation of two companies. The
merger is mainly a combination of two companies in order to make a new company whereas in
acquisition one company is acquired by another company.
NBAD
National bank of Abu Dhabi is one of the largest banks in Abu Dhabi, and it was founded in the
year 1968. It is the public joint stock company, and the total assets of the company are $220.4
Billion. The company provides various products to the target audience such as the loan,
corporate banking, savings, corporate divisionary, property management, Islamic banking, and
others.
First Gulf bank
It is the third largest bank in UAE which was established in the year 1979. It is a public bank
which provides various services such as consumer banking, wholesale banking, treasury, and
investment ("First Gulf Bank," 2017).

Historical background of case
The merger has been taking place between the national bank of Abu Dhabi and First Gulf bank
on 1 April 2017. Both the banks are trading under Abu Dhabi Security Exchange, and the
combined name of the banks is renamed as "first Abu Dhabi Bank." After the merger, it has
become the largest bank in UAE, and one of the largest in MENA region as the total assets of the
company are approximately more than AED 670 Billion. The market regulator of UAE has
issued a certificate of the merger between NBAD and first gulf bank in order to develop one of
the largest banking entities in the UAE which also encourages other banks in the banking sector
of UAE. The total assets of both the banks at the end of 2016 were DH665.8Billion ("FGB and
NBAD have Successfully Merged," 2017).
Work mechanism
The central banks play a significant role in the financial sector of UAE and payment system of
banks are operated by central banks which includes processing high-value payments, Cheque
clearing system, national ATM sharing scheme, and wage protection system of UAE. The
working mechanism of banks includes collecting money from customers as a saving and leads it
to the people as a loan in order to generate profits. The Cheque clearing system of banks is done
under image Cheque clearing system which provides robust payment mechanism with safety and
security of payments in UAE (Dantas et al., 2017). The Central bank of UAE is responsible for
delivery of payment timely and its settlement within the specific period of time. The wage
protection of employees in the UAE is protected under the UAEWPS in which right amount is
dispatched by the employer to the employees within the specific time framework. The national
ATM sharing scheme is regulated by UAESWITCH within the specific period of time.

Services provides
After the merger, the company has become one, and they are providing various services such as a
loan, savings, corporate divisionary, wholesale banking, Islamic banking, consumer banking,
treasury and investments, and others.
Recent development
In the recent development of combined banks, both are working in organizational structuring
through appointing top level management team in order to manage the merger and acquisition in
a most efficient and effective manner. All senior management team of both the banks is
participating in the new management team in order to develop the bank as the largest bank in
UAE. The UAE fund transfer system allows the banks to transfer their funds from one bank to
another through holding accounts in the central banks. The aim of new banks after the merger is
to strengthen its partnership across its global network in nineteen countries in order to trade
flows and financial links among the UAE and its trading partners (Reddy et al., 2017).
Statistical data
According to the statistical data, it is shown that the combination of deposits has been increased
to Dh402.58Billion which is the combined loan value that is increased to Dh357.2 Billion at the
end of 2016 and it shows that the combination of total assets of both the banks was estimated at
Dh665.8Billion. According to the research studies, it is shown that the combination of both
banks has leads to increase the profit by reducing the operating costs by Dh500 Million in a year
and one-time business unification cost will be Dh600 Million. The statistical data shows that the
merger provides synergy to the banks that enable to generate high profits by increasing the

strengths of the company. According to the market capitalization, it is the two largest banks in
Abu Dhabi which will trade on the Abu Dhabi stock exchange under one name in order to
generate higher profits within the specific time framework.
Conclusion
It can be concluded that the merger is successful among the two largest banks of UAE which
shows that the synergy from merger helps to generate higher revenue within the specific period
of time. It is also setting the trend in the banking sector which will be followed by other banks in
UAE. The merger between the two largest banks leads to reduce the operational cost of the banks
in order to generate higher revenue. The merger has increased its total assets value in order to
strengthen the banking system by setting new goals which enable to attract large investors within
the specific period of time.

References
First Gulf Bank. (2017). Fgbgroup.com. Retrieved 13 May 2017, from
https://www.fgbgroup.com/personal-and-business-banking
FGB and NBAD have Successfully Merged. (2017). Nbad.com. Retrieved 13 May 2017, from
https://www.nbad.com/en-ae/about-nbad/overview/newsroom/2017/fgb-and-nbad-successful-
merging.html
Dantas, M. M., Merkley, K. J., & Silva, F. B. G. (2017). Government Guarantees and Banks’
Earnings Management.
Reddy, K. S., & Xie, E. (2017). Cross-border mergers and acquisitions by oil and gas
multinational enterprises: Geography-based view of energy strategy. Renewable and Sustainable
Energy Reviews, 72, 961-980.