NBAD, First Gulf Bank said in talks to form biggest Middle East lender

National Bank of Abu Dhabi PJSC and First Gulf Bank PJSC are said to be discussing a potential merger to establish the Middle East’s largest lender, people with knowledge of the matter told Bloomberg.

While talks are still ongoing, both banks may decide against pursuing a merger, the people said, asking not to be named because the talks are still private.

The potential combination— with assets of about $170 billion— would surpass Qatar National Bank, which is currently the largest in the region. The talks come as the banking industry in the Middle East, particularly in the United Arab Emirates, sees its profits drop due to slower economic growth, lower government spending, and weaker asset quality.

If the deal is completed, it would be the UAE’s first major banking sector merger since National Bank of Dubai and Emirates Bank International merged to create Emirates NBD PJSC in 2007.