UPDATE: ADCB Buys RBS Retail Banking Ops In UAE

16th Jun 2010 17:40

(Adds RBS comment, background) By Tommy Stubbington and Mirna Sleiman Of DOW JONES NEWSWIRES DUBAI (Zawya Dow Jones)--Abu Dhabi Commercial Bank (ADCB.AD) which is majority-owned by the government of Abu Dhabi, agreed Wednesday to acquire the retail operations of U.K. lender Royal Bank of Scotland PLC (RBS) in the United Arab Emirates. ADCB agreed to pay total cash equal to the net asset value of the RBS business at completion plus a premium of AED169 million ($46 million), RBS said in a statement. As of Dec. 31, the net assets of the business transferred amounted to approximately AED200 million. The transaction is subject to regulatory approval and is expected to complete in the fourth quarter, 2010, the statement added. "RBS continues to have an extensive reach in the Middle East and Africa. Our corporate and investment banking businesses will maintain their presence in the region, as will our international wealth management business, RBS Coutts," said Simon Penney, head of Middle East and Africa at RBS, in a statement. "These businesses will continue unchanged as a result of today's announcement and our task is to remain focused on helping RBS return to standalone financial strength." ADCB said last month it was in talks with RBS bank over the acquisition. RBS last year announced a plan to reduce its international presence and sell assets. The U.K. government owns about 85% of RBS. The acquisition comes as ADCB, Abu Dhabi's third-largest lender by market capitalization, struggles with provisions for bad loans and deteriorating earnings. The bank is one of the largest local lenders to government-owned conglomerate Dubai World, which last month agreed in principle with its main lenders to restructure $23.5 billion of debt. ADCB Chief Executive Ala'a Eraiqat told Zawya Dow Jones in April that the bank has AED12 billion in cash, enough to pay off its upcoming debt. ADCB has a AED3.67 billion loan maturing June 28. In April, it posted a 36% drop in first-quarter net profit to AED225 million. "ADCB most probably acquired RBS's retail platform in the U.A.E. on attractive terms, which will allow it to reinforce its presence in this segment," said Sofia Boury, bank analyst and assistant vice president of equity research at Dubai-based Shuaa Capital. RBS shares at 1520 GMT were up 0.8 pence, or 1.8%, at 45.02 pence. ADCB shares closed almost 2% higher in trading Wednesday at AED1.54 in a slightly negative overall market. -By Tommy Stubbington and Mirna Sleiman, Dow Jones Newswires; 44-20-7842-9268; [email protected] (Nour Malas contributed to this story) Copyright (c) 2010 Dow Jones & Co. (END) Dow Jones Newswires June 16, 2010 12:40 ET (16:40 GMT)