DUBAI- First Abu Dhabi Bank (FAB) said on Wednesday it was not in merger talks with Abu Dhabi Islamic Bank.

The comment followed a local news report by Arabian Business which said Abu Dhabi's largest bank by assets had renewed "discussions for a possible merger deal" with the Shariah-compliant lender.

"Our official stance on this remains the same as our official statement published on ADX in April 2019," FAB said in an emailed response to Reuters.

Citing unnamed sources, Bloomberg reported in April 2019 that Abu Dhabi was considering merging the two lenders to create the Gulf region’s largest lender.

There has been speculation over the past year of more banking tie-ups in light of a wave of consolidation sweeping Abu Dhabi.

With around 50 banks, the crowded UAE banking sector has been squeezed by lower government spending and thinner profit margins.

(Reporting by Hadeel Al Sayegh; editing by Jason Neely) ((Hadeel.AlSayegh@thomsonreuters.com; +971566883310;))