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GCC expects to see fresh round of M&As in banking sector

GCC banking

This year will see Islamic and conventional banks will shift focus to maintain their asset quality over business expansion

The GCC is expected to see a fresh round of mergers and acquisitions in the banking sector, media reports said. The forecast is applied to both Islamic and conventional banks in the region. 

According to S&P analysts, the next round of mergers and acquisitions in banking might see consolidation across the region. It is certain that the Covid-19 pandemic will slow down the growth of GCC Islamic and conventional banks in 2020. This is because Islamic and conventional banks will shift focus to maintain their asset quality over business expansion to mitigate the negative effects during the crisis, media reports said. 

An observable trend is noticed in the UAE’s banking sector over several mergers and acquisitions. For example, Emirates Bank and the National Bank of Dubai merged to established Emirates NBD in 2007. In another example, the National Bank of Abu Dhabi and First Gulf Bank merged to form  First Abu Dhabi Bank in 2017.

More recently, Abu Dhabi Commercial Bank and Union National Bank merged last May. Then the merged entity acquired Al Hilal Bank as its Islamic arm. Even the Kingdom of Saudi Arabia saw its first bank merger in two decades take place last year. The merger was between Saudi British Bank and Alawwal Bank to establish the Kingdom’s largest third-largest financial institution. 

In addition to banks, fintechs are also seeing massive opportunities during the pandemic. 

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