DUBAI/ABU DHABI- Abu Dhabi's Al Hilal Bank has made about 160 people redundant ahead of a three-way merger with Abu Dhabi Commercial Bank and Union National Bank, , three sources familiar with the matter told Reuters.

Majority of those laid off were staff outsourced from a Dubai-based company, one of the sources said.

The staff were largely in the retail and sales business while a small number were in the administration and finance departments, the sources said.

More cuts are expected to follow in June, said two sources who declined to be named due to commercial sensitivities.

Al Hilal Bank did not immediately respond to a Reuters email seeking comment.

The bank is expected to merge with the two other Abu Dhabi lenders, which will create the third largest bank in the United Arab Emirates, in the first half of 2019.

It will involve a statutory merger between ADCB and UNB. ADCB will issue 0.5966 shares for every UNB share, corresponding to a total of 1.64 billion new shares issued to UNB shareholders and valuing UNB at nearly $4 billion.

Al Hilal Bank will operate as a separate Islamic entity within the merged bank.

At least 500 jobs could be cut as part of the merger, the second bank tie-up in Abu Dhabi in recent years as part of a wave of consolidation, sources told Reuters in January. One of the sources said UNB and Al Hilal could feel the bulk of the job cuts.

Lower oil prices and weak economic growth have contributed to a wave of consolidation among companies in the Gulf.

The UAE has 50 commercial banks including 22 local lenders in a country of about 9.5 million people.

Abu Dhabi Investment Council (ADIC), which is now part of state investor Mubadala Investment Co, is the majority shareholder in ADCB and UNB, both listed in Abu Dhabi. Unlisted Al Hilal is wholly owned by ADIC.

(Editing by Jane Merriman) ((Hadeel.AlSayegh@thomsonreuters.com; +971566883310;))