Abu Dhabi government-controlled First Gulf Bank (FGB) and National Bank of Abu Dhabi (NBAD) are preparing to launch the first formal phase of staff retrenchment ahead of their merger that will create the biggest banking entity in the Middle East and North African region.

NBAD, the top lender in the emirate by assets, is expected to handover retrenchment notices to C-2 level executive, a term which usually refers to second-tier management including deputy heads of various departments and senior executive vice president-level employees, at the beginning of the week starting 5 February, the sources said, asking not to be identified as the information is not public. FGB, the third biggest lender in the Abu Dhabi, is expected to do the same, they added.

The C-2 level executives have already been interviewed to determine whether they will continue in their roles or would be made redundant. It is not clear how many personnel will be affected from both FGB and NBAD in the initial phase.

“Job cuts will happen in phases. This is the first one and there are several more to come,” said one of the sources.

The number of job losses from the combined workforce of two banks could be anywhere between 1800 and 2000 or could go even higher, depending on the final business strategy of the new entity, the sources added.

“This is a ballpark figure and there has been no change in that guidance,” a second source said.

FGB and NBAD confirmed that a new level of management will be announced in due course to lead the combined bank once the merger is completed at the end of the first quarter of 2017, a spokesman for both banks said in a joint statement, adding that until then, both lenders will continue to operate independently under their current leadership teams.

“No further decisions relating to the organisational structure or the headcount of the combined bank have been confirmed,” the spokesman said. 

In July, the boards of the two banks voted to merge the two financial giants and recommend the deal to respective shareholders, who in December, gave it a nod.

Alex Thursby, who was at the helm of NBAD at the time of merger announcement, quit his role as chief executive in August and Abhijit Choudhury took over as acting CEO, according to a statement by the bank at the time.

The bank’s four top managers Abdulla Mohammed Saleh AbdulRaheem, the deputy group chief executive; Qamber al-Mulla, the senior managing director and chief executive of Gulf and international; Saif al-Shehhi, the senior managing director, UAE government and Abdulla al-Otaiba, senior managing director and group head of global retail & commercial operations have also quit the bank, according to reports.

NBAD and FGB in the third week of August released the pro-forma preliminary financial information of the entity, which will be established following their combination. FGB was named as the acquirer of NBAD, despite the latter being bigger in the size in terms of assets, they said in joint statement at the time.

FGB has reported an 11 per cent year-on-year decline in the fourth-quarter 2016 net income to AED1.53bn ($417m). NBAD has overshadowed its acquirers quarterly performance as it reported 28 per increase in fourth-quarter net profit to AED1.32bn.

The deal to combine both lenders, which was previously described as merger of equals, will create a lender with AED665.81bn ($181.27bn) in assets, according to the full-year 2016 financial statements by respective entities.

The transaction is the first major move toward consolidation in many years in a market where about 50 lenders compete for business. In July, the boards of the two banks voted to merge the two financial giants and recommend the deal to respective shareholders.

Two of Abu Dhabi’s largest sovereign investment funds International Petroleum Investment Company (IPIC) and Mubadala Development Company are also in the process of merging.