Two is for joy

AT FIRST glance, Nigeria’s decision last month to float its currency and the announcement this week of a bank merger in the United Arab Emirates (UAE) have little in common. Nigeria is a country of almost 180m people with a GDP per person of less than $3,000 (at last year’s market exchange rates). The population of the UAE is 18 times smaller and 13 times better off. Both countries are, however, members of the Organisation of the Petroleum Exporting Countries (OPEC), a cartel, and both are learning to cope with cheaper crude.

The merger of National Bank of Abu Dhabi (NBAD) and First Gulf Bank (FGB), approved by their boards on July 3rd, will create a national champion with assets of over 640 billion dirhams ($175 billion). FGB’s strengths lie in consumer banking, credit cards and housing loans. NBAD describes itself as a “banker to the government”, with a strong investment-banking arm. The merged institution will help Abu Dhabi “project its financial power” beyond its borders, says Simon Kitchen of EFG-Hermes, an investment bank.

It is also, true, however, that the UAE itself has...Continue reading