Recent news in United Arab Emirates hold the fact that banks are getting affected greatly in terms of numbers. It is expected from banks in the country to meet a new wave of consolidation from lenders. This is due to the fact that there is a need to improve work and profit and avoid all the inefficiencies.
The banking industry has been shrinking and losing lately in the country. This might be due to the fact that digital spending is the most common form of trading in the country. However, other experts explain that the main problem lies within the banks due to their inefficiency, low profitably and less well-capitalized. The consolidation is the only expected result from such factors.
This was commented on by Edmond Christou which is a BI banking analyst. He commented on the loss in the banking industry saying, “The absence of common shareholders and a lack of cross-Emirate deals have so far hindered transactions. Local deals offer cost savings and scale, as well as accelerating digital transformation for smaller lenders. Third wave could be centered on industries undergoing reforms, such as insurance, which is less capitalized, advanced and incapable of supporting economic growth and savings cultures.”
A few of the stated banks that fell under the second wave of consolidation are the Abu Dhabi Islamic Bank PJSC and Commercial Bank International PSC. They have showed worse results than other banks due to their idea of being commercially driven.