Banks in the UAE and other Gulf Cooperation Council (GCC) countries are actively seeking to expand their footprint in Turkey, Egypt, and India. This move is driven by favorable economic conditions and promising growth prospects in these markets, according to Fitch Ratings.
Fitch noted that several GCC banks are interested in acquiring banks in Turkey, Egypt, and India. “We believe external growth is part of some GCC banks’ strategy to diversify business models and improve profitability. By deploying capital into high-growth markets, they may be able to compensate for weaker growth in their home markets,” stated Fitch analysts. These banks aim to leverage the large, untapped populations in Turkey, Egypt, and India, where the banking system assets-to-GDP ratios are below 100 percent, compared to over 200 percent in the largest GCC markets.
UAE banks, in particular, have been expanding aggressively into these countries as UAE businesses extend their operations there. For example, earlier this month, Abu Dhabi Commercial Bank (ADCB) announced its expansion into Central Asia—a $1.75 trillion economy—by establishing a hub in Kazakhstan for its Shari’ah-compliant corporate banking services. This move is intended to support the growth ambitions of companies participating in Central Asia’s rapid economic development.
“Through a renewed presence in Kazakhstan, combined with our network in the UAE and broader Middle East region, ADCB is uniquely positioned to support companies operating along key regional economic corridors,” said Ala’a Eraiqat, Chief Executive Officer of ADCB Group.
Significant Exposure
Fitch Ratings revealed that GCC banks have substantial exposure outside the GCC region, particularly through subsidiaries in Turkey and Egypt, with about $150 billion in assets as of the end of the first quarter of 2024. “While these markets are the main focus for growth, there is increasing interest in India, particularly from banks from the UAE, which has strong and growing financial and trade links with India,” Fitch added.
Among UAE banks, Emirates NBD has exposure to Turkey, while Abu Dhabi Islamic Bank and First Abu Dhabi Bank have exposure to Egypt. The interest of GCC banks in expanding into Turkey has grown since the country’s policy shift following last year’s presidential election, which has reduced external financing pressures and macro-financial stability risks. This shift recently led Fitch to upgrade Turkey’s banking sector outlook.
In Egypt, GCC banks are also showing increasing interest. “We believe this is driven by Egypt’s improved macroeconomic environment, opportunities offered by the authorities’ privatization program, and the expansion of some GCC corporates in the country,” Fitch explained.
However, Fitch cautioned that the rising cost of acquiring banks in Turkey, Egypt, and India could impact the acquisition plans of GCC banks.
