First Abu Dhabi Bank Reportedly Offers $35 Billion To Buy Standard Chartered

According to the latest reports initially published by Bloomberg citing unnamed sources, UAE’s First Abu Dhabi Bank PJSC (FAB) is moving ahead with the potential purchase of Standard Chartered Plc for an all-cash deal between $30 billion and $35 billion.

The Standard Chartered Plc bank was formed back in 1969 as a result of a merger between two banks: The Chartered Bank of India, Australia, and China, as well as the Standard Bank of British South Africa.

FAB’s Standard Chartered Takeover Code-named “Silver-Foxtrot”

With operations present worldwide, Standard Chartered offers consumer, institutional, and corporate banking services as well as treasury services. Even though the headquarters of Standard Chartered is located in London, UK, the company does not conduct any form of retail banking operations within the United Kingdom. In fact, almost 90 percent of the bank’s profits come from the Middle East, Africa, and Asia.

The First Abu Dhabi Bank PJSC was formed following the merger of the National Bank of Abu Dhabi (NBAD) and First Gulf Bank (FGB) back in 2017. FAB is currently the largest bank based in the United Arab Emirates and is primarily owned by the Abu Dhabi Investment Council Company, with Sheikh Tahnoun bin Zayed Al Nahyan functioning as the chairman of the bank.

FAB has its headquarters located in the Khalifa Business Park in the UAE capital city of Abu Dhabi and has operations in the Middle East, Africa, Europe, North America, South America, and Asia Pacific regions.

Currently, Standard Chartered has a market capitalization of about £22 billion, whereas FAB has a market capitalization that is close to double that of Standard Chartered. The all-cash deal that is reportedly put forward by FAB at the moment is backed up by the sovereign wealth fund of Abu Dhabi and the Al Nahyan family, the ruling family of the emirate of Abu Dhabi.

If the deal finalizes, the resulting merger will form a banking entity that will have assets worth over $1 trillion!

Even though reports suggest that FAB could make official moves soon, it might not really happen until July this year, at least.

This is because back in January 2023, there were reports of FAB moving forward with a potential deal with Standard Chartered. As soon as the reports became public, FAB announced that they were officially moving away from the potential bid.

FAB dropping their plans kickstarted a cooling period as part of the regulatory laws, wherein the Abu Dhabi-based bank cannot make another offer for the next six months unless another potential buyer comes forward with their bid.

In its official filing with the Listing Companies Department of Abu Dhabi Securities Exchange back in January, FAB had officially confirmed that they were in the “very early stages” of evaluating a possible offer for Standard Chartered, however, was no longer pursuing the deal as of the date of filing.

With the latest news, we may see FAB make an approach by July for a potential buyout of Standard Chartered, or even sooner in case another bidder appears on the scene.

However, even after the cooling period ends, the buyout won’t be a smooth sail for FAB. Several challenges in terms of regulatory compliance and approvals are expected to hinder the merger.

As Standard Chartered is currently listed in the London and Hong Kong exchanges, there will be regulatory approvals needed there as well.

One expected move that may happen as part of the merger is for Standard Chartered to delist itself from both the London and Hong Kong exchanges and move its headquarters from London to Abu Dhabi.

FAB is also said to be open to other purchase arrangements, wherein they could acquire parts of operations controlled by Standard Chartered, potentially leading to fewer regulatory challenges.

The recent reports have shown a positive impact on the stock market as well, with Standard Chartered stocks valuation showcasing a 10 percent jump after the news was published.

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Talking about the recent buyout news, Standard Chartered CEO Bill Winters said that his bank had not held any sort of talks with FAB about a takeover.

Winters made his comments while speaking at the World Economic Forum held in Davos where he also said “Standard Chartered is doing very well at the moment. Everything is on track for us and a possible sellout is not something we have engaged with or are interested in.”

He also mentioned that “it is quite logical for Middle Eastern banks to have interest in buying out financial institutions based in Europe, considering the valuations such institutions have. However, as banks are often considered a “protected species”, deals or mergers are quite difficult to finalize.”

This is not the first time another bank has shown interest in Standard Chartered. Within the last decade, JPMorgan and Barclays, considered to be industry rivals of Standard Chartered, have shown their interest in buying out Standard Chartered. However, no progress was made on the actual deal.