The human cost of mega mergers

15 February 2017

The state-backed tie-up of National Bank of Abu Dhabi and First Gulf Bank could mean up to 2,000 jobs are lost

Come the end of March, the formal merger of National Bank of Abu Dhabi and First Gulf Bank will be complete. It will give rise to a banking giant with aspirations to carve a niche in the emerging markets business and cater to a much broader client base at home. Yet it will have fewer personnel to achieve these ambitions.

There is a human cost attached to mergers and Abu Dhabi’s state-backed deal is no different. Initially, as many as 2,000 jobs could be lost and this number could rise. The process, which will be carried out in phases, has begun in earnest and the two lenders have handed over retrenchment notices to second-tier management.

The merger initiative has come at the worst time. Add these job losses to the same number already retrenched from local banks and some international lenders based in the UAE and the gravity of the situation becomes clear.

The fall in oil prices and government spending cuts have slowed economic growth in the UAE and that has filtered into the banking system, where most lenders have struggled to grow profits on the back of rising credit losses and provisioning for non-performing loans.

International lenders from Standard Chartered to HSBC and Barclays in Dubai have all fired staff in different batches. Emirates NBD, Emirates Islamic Bank, Mashreq bank, RAK Bank, Abu Dhabi Islamic Bank are among some of the local lenders to have cut jobs. Some of the bankers who lost their jobs have found alternative employment or set up their own advisory businesses, but most are still waiting for the situation to improve.

Needless to say the months spanning the tail-end of 2015 and 2016 have been tough for banks, and there is not much respite on the horizon so far in 2017.

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