First Abu Dhabi Bank is scouting for a mid-sized private bank acquisition in India. The lender wants a majority stake to expand its presence in high-growth markets. “FAB has evaluated a few options, though nothing is immediate,” a banker said. The bank currently operates two branches in Mumbai and GIFT City.
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A year after the Emirates NBD–RBL Bank deal, the United Arab Emirate's largest lender, First Abu Dhabi Bank (FAB), is scouting an acquisition target in India. The bank is keen on buying a mid-sized domestic private bank, sources aware of FAB's strategy said.
“FAB has evaluated a few options, though nothing is immediate,” a banker, who spoke on condition of anonymity, said.
According to investment bankers, FAB’s senior management is said to have held meetings with Bandhan Bank and a Kerala-based bank.
“Nothing conclusive has emerged from these meetings yet and a deal could still be some time away,” an investment banker said, requesting anonymity. Banks which are currently trading below book value and offer a certain scale and geographic presence are of interest to FAB, the banker said.
FAB is keen to acquire a 51 percent majority ownership if the plan fructifies. Many mid-sized banks such as Bandhan Bank and old private banks, including CSB and South Indian Bank, are trading at book value or slightly lower.
"However, this should not imply that FAB is looking at all these names," the person cited above said.
An email sent to FAB seeking comment on its India plans went unanswered at the time of publication.
Why India?
FAB has two branches in India — in Mumbai and the GIFT City. According to reports, the bank garnered roughly $1.5 billion through FCNR-B deposits and its decision to expand outside the Middle East is part of a broader diversification strategy to make inroads into high-growth markets.
India’s location along the vital East–West trade corridor is reportedly the primary reason FAB is looking at the country as part of its diversification plan.
The East–West corridors refer to transport, trade, and economic routes that connect markets across Asia, the Middle East, Europe and the Americas.
“Also, almost a year after the Emirates NBD–RBL Bank deal, FAB has seen the synergistic advantages in such cross-border expansions and is keen to follow that path,” said an investment banker associated with FAB in India, requesting anonymity.
India accounts for 5 percent of Emirates NBD’s deposits and 6 percent of its consolidated loan book.
“Having seen how India offers growth potential and a natural hedge amidst global uncertainties, it is logical for FAB to explore something on similar lines,” said the banker cited above. In their home market, FAB and Emirates NBD are seen as close competitors.
“When the second largest bank (Emirates) does something, the largest player (FAB) won’t ignore the move,” said another banker aware of FAB’s India strategy.
While FAB is not in a hurry to seal a deal, the transaction is likely to conclude by the end of this fiscal or early FY28.
“They would be quite conscious about the price at which they would enter into a deal,” said another investment banker.
“While the acquisition will allow them an entry into the Indian market and offer a banking licence at a reasonable price, they are scouting for banks with a clean holding structure and one where they would have operational freedom,” one of the sources cited above said.