Based on an Infoquest Expert Voices interview with San Sanghera, Former Head of Group Strategy, First Abu Dhabi Bank
The Quiet Resistance Behind GCC Bank Mergers
For an industry sitting on extraordinary capital and an unusually deep pool of acquisition targets, GCC bank mergers have stayed surprisingly rare. San Sanghera, who spent 18 years at HSBC and 12 years at First Gulf Bank and First Abu Dhabi Bank as head of group strategy, says the math alone makes the case for change. The UAE still has more than 50 banks, a number he calls unsustainable for a market of its size in the long run.
Sanghera was at the center of one of the region’s biggest banking mergers, the combination of FGB and National Bank of Abu Dhabi, which created one of the largest banks in the Middle East. That deal showed what is possible when the right conditions align. But for most GCC banks, those conditions have not yet lined up, and the reasons run deeper than simple reluctance.
Ownership, Politics, and the Fear of Foreign Control
The first barrier is ownership. A bank is often a cornerstone of a wider business empire, and owners do not give that up without a fight. When a bank is performing well, it becomes a source of prestige and influence that few families or groups want to relinquish, even if a merger would create a stronger institution.
The second barrier is political. Sanghera points out that when a bank represents a meaningful share of a national market, central banks and governments are wary of letting foreign investors take control. The bank is too tied to the country’s financial stability to hand over lightly, which has kept many potential combinations off the table entirely.
A Shift Regulators May Already Be Weighing
Sanghera believes that stance is starting to soften. He sees situations where central banks could begin recognizing the advantages of allowing foreign players into their markets, or encouraging their own domestic banks to expand abroad instead of staying purely local.
None of this happens overnight. There are, as Sanghera puts it, a thousand steps between recognizing the logic of a deal and actually closing one. But the direction of travel is becoming clearer, and the business, cultural, and governmental logic for cross-border GCC bank mergers is building.
GCC Bank Consolidation: Barriers vs. Drivers of Change
Why mergers have stalled, and what could finally move them forward
What Could Change That
Shareholder Returns Will Force the Issue
Perhaps the most powerful driver, according to Sanghera, will not come from regulators at all. It will come from shareholders. Banks that consistently fail to deliver competitive returns will eventually face pressure to sell, not because anyone forces them, but because it becomes the only sensible path forward.
Shareholders who see their capital underperforming in one bank will want it redeployed somewhere more productive. That pressure, Sanghera argues, is one of several forces that will eventually push more GCC bank mergers to happen, even in markets where they have historically been avoided.
Payment Companies Show How GCC M&A Plays Out
While bank mergers remain slow to materialize, the payments sector offers a preview of how consolidation tends to unfold in the GCC once a market matures. Sanghera describes the payments space as approaching a mop-up phase, where large incumbents acquire smaller players not for their technology or expertise, but simply for access to new markets.
That dynamic, buying access rather than capability, is a pattern worth watching. It suggests that when GCC bank mergers do accelerate, market access and footprint expansion may be just as important a motivation as cost synergies or scale.
Portfolio Sales Are Quietly Reshaping the Market
Alongside full mergers, Sanghera points to a separate trend gaining momentum: portfolio sales. This is distinct from a carve-out, which he describes as splitting off part of a business for an IPO or similar transaction. A portfolio sale is simpler. It is a business deciding that a particular customer segment or product line no longer fits its strategy, and selling it to someone better positioned to run it.
His example is a bank that decides mortgages are not its strength and sells that portfolio to an institution with a funding base better matched to long-term lending. As family businesses move into second and third generation leadership, Sanghera expects this kind of selective restructuring to spread well beyond financial services and across GCC industries more broadly.
Three Ways GCC Companies Restructure
Full merger, carve-out, or portfolio sale, and what sets them apart
| Deal Type | What Happens | Typical Motivation |
|---|---|---|
| Full Merger | Two organizations combine into one, often creating a new shared structure and culture. | Scale, market position, and long-term competitiveness. |
| Carve-out | A division or unit is separated from the parent business, often heading toward an IPO or independent operation. | Unlocking value from a unit that performs better on its own. |
| Portfolio Sale | A specific product line or customer segment, such as a mortgage book, is sold to a better-positioned buyer. | Refocusing on core skills as the business matures. |
What This Means for the Next Decade of GCC Bank Mergers
Put together, these threads point toward a region approaching a tipping point. Capital is abundant, ownership structures are maturing, payment companies are already consolidating, and shareholder pressure is quietly building beneath the surface of underperforming banks.
Sanghera’s advice to anyone watching this space, or considering a move themselves, is to respect the complexity involved. Thorough due diligence and patience matter more than speed. GCC bank mergers may have been rare so far, but the conditions that kept them rare are shifting, and the institutions that prepare early will be the ones positioned to act when the moment arrives.
