Abu Dhabi-listed Sharjah banks on Sunday denied reports of three-way mergers, citing them as rumours.
Last week, it was reported that the Bank of Sharjah, Invest Bank and United Arab Bank were engaged in merger talks.
"United Arab Bank denies the news and confirms its invalidity," it said in a statement to the Abu Dhabi Securities Exchange.
"Invest Bank denies recent media reports suggesting that Invest Bank is in three-way merger talks with Bank of Sharjah and United Arab Bank. Invest Bank would like to clarify to the public and the markets that those media reports are based on rumours and speculation," the lender said in a statement on Sunday.
The Bank of Sharjah said that the merger news is a rumour, hence it doesn't comment on speculation.
Quoting sources, Reuters reported on September 27 that the Sharjah government was considering a merger between three of the emirate's banks that could create a lender with about Dh66.2 billion of assets.
The UAE's banking sector is believed to be overbanked as around 50 banks are operating in the country with a population of about nine million. Growing competition in the banking sector has led to consolidation, resulting in the merger of National Bank of Abu Dhabi with First Gulf Bank. Later, Abu Dhabi Commercial Bank, Union National Bank and Al Hilal Bank announced a merger with around Dh418 billion assets.
Global ratings agency Moody's termed the ADCB, UNB and Al Hilal merger as credit positive for the banking system, which will increase banks' pricing power, reduce pressure on their funding cost and increase their ability to meet sizeable investments.
Moody's said the completion of bank mergers in the GCC has historically proven challenging because of shareholders' high pricing expectations and the healthy profitability of banks in the region. However, lower economic growth following the decline in oil prices in mid-2014 is gradually driving consolidation in the over-banked region.
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