The third largest banking giant in the UAE with Dh423 billion in assets came into being on Wednesday following the merger of Abu Dhabi Commercial Bank, Union National Bank and Al Hilal Bank.

The new round of consolidation, more than two years after the merger of the National Bank of Abu Dhabi and First Gulf Bank to create the Dh671 billion First Abu Dhabi Bank, seeks to create another financial titan with increased pricing power ensuing reduced pressure on funding cost.

The merged ADCB Group, serving over one million customers, is a powerful new force in the UAE banking sector as one of the largest retail lenders, accounting for a 21 per cent market share of retail loans as at December 31, 2018.

Following the landmark transaction, the combined entity trades on Abu Dhabi Securities Exchange under the ticker of ADCB. UNB has been delisted and dissolved as a legal entity while Al Hilal Bank will remain a separate Islamic banking entity and will focus on serving retail customers through digital channels under its own brand.

Analysts said such a financial powerhouse will have increased ability to meet sizeable investment requirements.

Shares in ADCB Group, which becomes the second biggest financial institution in Abu Dhabi, began trading on Wednesday after the merger plan was announced last September.

The stock ended the day 1.8 per cent lower, underperforming the Abu Dhabi equity index, which was flat at 5,258 points.

Planning for the integration of the three banks is progressing well, with integration of operations and customer experience set to accelerate in a phased approach from the second half of 2019.

The ADCB brand will gradually replace the UNB brand, and customers will be given access to an enhanced range of products and services.

Chairman of ADCB Group, Eissa Mohamed Al Suwaidi, said the contribution each bank has made individually to the UAE's vision of economic development has been significant.

"We can look forward to making an even greater contribution as a single banking group. We have an experienced and dedicated management team, who have a clear direction for the bank and will lead us capably towards our goal of long-term, sustainable growth. This is the beginning of a new chapter in our shared story."

Khalifa Salem Al Mansouri, acting chief executive of Abu Dhabi Securities Exchange, said the enlarged ADCB Group is a public company of strategic importance to Abu Dhabi, and its operations will help to drive the economic development of Abu Dhabi and the UAE.

"Major deals like this are testament to the UAE's well-paced financial and economic evolution, and support the ADX's ongoing appeal to investors, which is based on its advanced infrastructure, best-practice transparency and diverse digital and business services for listed companies," said Al Mansouri.

"This transaction is an important step in the transformation of the UAE's economy. The new ADCB Group is well-placed to make an even greater contribution to the economic development of our nation," said Ala'a Eraiqat, ADCB Group Chief Executive Officer and Board Member.

He said the merger creates a resilient banking group with the capacity to invest in a mission to provide excellent service for customers.

Banking circles said there could be more such mergers with nearly 50 banks competing in a market with nine million people. By comparison, Saudi Arabia has 25 banks serving a population of almost 33 million, while Australia has four big banks for its 23 million people.