First Abu Dhabi Bank open to acquisitions to spur growth, CEO says

Exclusive: The bank will pursue deals that make commercial sense and create value for the UAE's biggest lender, Hana Al Rostamani says

FAB is looking to organically grow its core businesses, says Hana Al Rostamani, chief executive of First Abu Dhabi Bank. Victor Besa / The National

First Abu Dhabi Bank is open to acquisition opportunities in the Middle East and North Africa and in markets beyond as long as the deals make commercial sense and create value for the UAE’s biggest lender by assets, its chief executive said.

FAB, as the Abu Dhabi-listed lender is known, is also open to acquiring international banks if an opportunity presents itself, as it continues to expand its footprint in markets across continents, Hana Al Rostamani told The National.

“If it adds value, certainly we will look into it,” she said of a potential acquisition of an international lender. She, however, declined to say if FAB is actively pursuing a deal at the moment.

The lender only looks at opportunities that allow it to “quickly build our portfolio ... enter a new market or enhance our platform and that is something we continuously opportunistically look into”, she said.

“So essentially, when we look at any acquisition, we broadly look at these three areas and where does [the deal] fit within those three spectrums. That really adds up [to] our overall strategy.”

Like its large peers in the six-member GCC economic bloc, FAB seeks to increase its dominance and has aspirations to expand beyond the Mena region to markets in Europe and Asia and become a global player.

In October, Saudi National Bank, the largest lender in the kingdom, said it was investing up to $1.5 billion in troubled Credit Suisse, for a stake of up to 9.9 per cent.

In 2019, Emirates NBD, Dubai's largest lender, acquired Turkey's fifth-biggest bank Denizbank for $2.8 billion.

FAB also evaluated a potential offer for the UK's Standard Chartered. The Abu Dhabi bank was at “the very early stages” of evaluations but was "no longer doing it", it said in January.

In February, FAB denied media speculation that it was considering a takeover bid for Standard Chartered.

FAB is in a cooling period and is bound by UK and Hong Kong regulatory restrictions. It reserves the right to announce an offer or possible offer for Standard Chartered within six months of the previous announcement based on several factors, according to its earlier disclosure.

These factors include an agreement of the board of Standard Chartered and if a third party announces a firm intention to make an offer for the lender, FAB said in February.

If the bank decides to pursue it and the deal to acquire Standard Chartered succeeds, it will create the 10th-largest banking entity globally by market value, alongside the Industrial and Commercial Bank of China, China Construction Bank, China Merchants Bank, JP Morgan Chase, Bank of America, Wells Fargo, HSBC, Citigroup, BNP Paribas and Banco Santander, according to The National's calculations.

FAB, which itself was created through the merger of National Bank of Abu Dhabi and First Gulf Bank in 2017, has actively been pursuing acquisitions in the broader Mena region for the past few years.

In February last year, FAB offered to acquire 51 per cent of the issued shares of EFG Hermes, Egypt’s largest investment bank. However, it withdrew the offer last April, due to “global market uncertainty and volatile macroeconomic conditions”, FAB said in a statement at the time.

Last June, FAB completed the merger of Bank Audi Egypt with its Egyptian operations, consolidating its market position in the most populous Arab country.

The combined entity, which operates as FABMISR, is one of the largest foreign banks in the Egyptian market, with assets in excess of $10 billion.

“For us, it's all about the value return and what future broad[-based] growth [it] brings for the institution. That's our main focus that we look at and it's not [for] a specific country … I'm looking at the region,” said Ms Al Rostamani, who took over FAB as the lender's first female chief executive in 2021.

“Of course, when you go outside [the home market] it's really for the long run and for the future.”

Egypt remains a key regional growth market for FAB and the lender is now looking to consolidate its presence and expand the suite of its products and services in the country.

“Egypt is important because it's the market where we operate as a universal bank and offer services to institutions as well as individuals,” she said.

FAB is equally eager to increase its presence in Saudi Arabia, the biggest Arab economy, where it currently has three branches. The lender is open to both organic and inorganic growth opportunities in the country.

“Egypt and Saudi Arabia are [two] large economies that we are looking into, expanding our presence and we've been quite active,” Ms Al Rostamani said.

FAB, which opened a representative office in Iraq, also ventured into China last year with its first branch, offering wholesale banking services to corporate and financial institution clients in the world’s second-largest economy and the broader Asia-Pacific region.

It is currently present in 20 markets across Mena, Europe, the US and Asia. It is continuously looking into “what are the opportunities” and where they fit and how they are “aligned with our strategy”, she added.

FAB is also looking to organically grow its core businesses and further develop its corporate and investment banking, as well as its wealth management division.

It is pursuing a broad-based approach to growth for all its businesses that contributed to the record top and bottom line growth for the lender last year.

The bank is focused on diversifying on “all fronts and all businesses” including institutional, commercial as well as the personal banking services, Ms Al Rostamani said.

“Organic growth is always there. We look at investing in the capabilities, the talent, the people, the systems to enable us to deliver to our clients and create value,” she said.

“We're a big player … and we have the right foundation, structure and capabilities”, which means FAB is in a very “strong position”, giving it the momentum to grow further, she added.

“That's what we are focusing on, to continue the momentum of our growth story as we move forward.”

FAB is also constantly reviewing its brick-and-mortar branch network as it continues to invest heavily in its digital banking capabilities.

It is rolling out upgrades across its mobile app and payments ecosystems, fully automating some of the processes that previously required manual intervention.

FAB, which in 2021 committed to lend $75 billion as part of its environmental, social and governance strategy, has so far lent $20 billion in sustainability-related financing.

The bank is on track to meet its end of the decade lending targets, Ms Al Rostamani said.

Last year alone, FAB facilitated $9.1 billion of sustainable financing and “the renewable energy transactions we facilitated are expected to contribute 2.3 gigawatts of clean power to the UAE’s energy mix by 2024”, she added.

FAB's net profit rose 7 per cent to a record Dh13.4 billion ($3.65 billion) last year on higher interest income and strong performance of its core businesses as the UAE's economy expanded at the fastest pace in more than a decade.

The lender is bullish on the growth prospects this year as the UAE, as well as regional economies, continue to show resilience, despite growing global macroeconomic headwinds, she said.