Abu Dhabi's Ambitious Acquisitions: Challenges and Ambitions in the Global Financial Sector
Over the past year, Abu Dhabi, the capital of the oil-rich emirate of the United Arab Emirates, has sought a series of ambitious acquisitions of international banks in a bid to increase its influence in the global financial sector. However, it has so far been unable to achieve success in any of these deals.
ADQ held initial talks to acquire the specialized investment bank Lazard earlier this year, according to people familiar with the matter. These people, who asked not to be identified because the conversations are confidential, said the negotiations quickly foundered over disagreements over the future of the 175-year-old Wall Street bank's independence.
ambitious acquisitions
It was reported that the First Abu Dhabi Emirate Bank (FAB) is studying a $35 billion offer to buy the British Standard Chartered Bank, and the bank has already tried to buy the largest investment bank in Egypt in 2022, however, neither of the two deals achieved success.
Last March, people familiar with the matter reported that the Royal Group, headed by UAE National Security Adviser Sheikh Tahnoun bin Zayed Al Nahyan, studied the possibility of acquiring the branch of Silicon Valley Bank in the United Kingdom after its collapse, and in the end it was acquired from It was accepted by HSBC Holdings for one pound ($1.3).
Challenges and ambitions aimed at strengthening the global weight of Abu Dhabi in the financial sector
Abu Dhabi has been able to achieve some successes in the financial sector by striking deals, however, there is no indication that it will stop pursuing major deals. Abu Dhabi Investment Company and Mubadala Investment Company.
This ambitious expansion, led by the ruling Al Nahyan family, and in particular Sheikh Tahnoun, aims to enhance the emirate's global weight and create new growth opportunities for its banking sector.
“The commercial banking sector in Abu Dhabi is still very focused on the local market despite the large balance sheets of the banks. It is heading towards global expansion with the aim of Diversifying the economy, reinvesting oil revenues and taking advantage of new opportunities.
Questions were directed to the UAE government media office, which did not respond to a request for comment.
The population of the United Arab Emirates is just over 9 million, which is a relatively small number. The country has a large number of regional and foreign banks already operating. Given the limited opportunities for expansion in the local market, some financial institutions in the country are seeking to expand internationally.
First Abu Dhabi Bank and Qatar National Bank vie for the position of the largest lender in the Middle East. Both banks have indicated their intentions to expand their global presence, but so far this has been limited to regional countries such as Turkey and Egypt.
Abu Dhabi's repeated attempts to acquire reveal the great ambition of rich institutions in the Middle East to play a greater role in the field of global finance, as well as to overcome the difficulties they face in their path.
First Abu Dhabi Bank acquired the Egyptian unit of Bank Audi in 2021, and withdrew its bid for the $1.2 billion Egyptian investment bank EFG-Hermes after lengthy regulatory delays, according to a Bloomberg report.
In the case of Standard Chartered, completion of the transaction was complicated and elusive due to obstacles and differences in the size of the two banks. Earlier this year, people familiar with the matter reported that regulatory clearances and compliance requirements were among the hurdles to the successful acquisition.
New acquisitions and ambitions
In May, Mubadala bought a majority stake in Fortress Investment Group, after cooperating with the management team of the American asset management company, Fortress Investment Group, through a deal worth more than $2 billion.
Abu Dhabi's growing ambitions appear in light of the crises plaguing some banks around the world. Thanks to the expansion of the UAE economy and the rise in oil prices in recent years, the region is home to a number of financial institutions that have a great ability to provide financing and close large deals. For example, in 2008, the richest Gulf states invested in buying stakes in Western banks such as Citigroup.
Earlier this year, ADQ Holding and the International Holding Company - headed by Sheikh Tahnoon - created a new investment group with the backing of US private equity firm General Atlantic. These entities aim to become the largest asset management company in the region, thanks to strong financing and global investment capabilities.
If the Lazard deal, which manages assets worth nearly $235 billion, had been successful, ADQ Holding would have gained additional strength, according to a source familiar with the sovereign fund's strategy.
The "Standard Chartered" deal, if successful, would have made "First Abu Dhabi Bank" become a giant in banking services to emerging markets, with assets exceeding a trillion dollars, equivalent to a third of the size of "HSBC" bank. At the present time, "First Abu Dhabi Bank" announced the study of buying the British bank, but confirmed that it is no longer considering submitting an offer.
ambitious acquisitions
However, Shabir Malik, banking sector analyst at EFG Hermes, expects FAB to continue to seek deals, saying: “For the bank to continue expanding at the same pace as previous years, it needs to explore expansion opportunities outside UAE... The type of merger and acquisition deals that the bank conducts will determine the course of the stock and its financial performance in the near and long future.
