THIS MORNING: UAE banks are paying up for deposits + ADIB sets the timetable for AED 1.75 bn rights issue

Good morning, everyone. The war continues to test the UAE’s business model on multiple fronts: Fitch thinks the non-oil economy will shrink this year, and lenders are paying up for deposits as liquidity tightens.

Our big story today: Fitch expects non-oil GDP to contract 3.7% this year before rebounding in 2027, but the bigger warning in its latest report is about where future investment goes. With Hormuz turning the UAE’s location into a risk, rivals could win some new projects that might once have defaulted to Dubai or Abu Dhabi, even if existing businesses stay put.

The banking side is under similar strain. UAE banks are raising deposit rates as credit growth outpaces deposit growth in 2Q, a sharp turn from the start of the year when lenders were sitting on comfortable loan-to-deposit ratios. It’s one reason why capital raising is rising up the agenda: ADIB has set a timetable for its AED 1.75 bn rights issue and Emirates Islamic is testing appetite for a possible five-year USD sukuk. Also on the fiscal front, the cabinet has approved AED 292.5 bn in federal spending for 2027-2029, up 28.3% from the previous cycle, although the 2027 allocation is 2.5% below this year’s record budget.

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Gargash wants a unified GCC front

Anwar Gargash, diplomatic adviser to the UAE president, stressed the need to “revive collective Gulf action” in response to attacks against Saudi Arabia, in a post on X. Gargash argues the bloc has fallen short so far on security and defense coordination, which led others to “overreach against [the GCC].” He referred to GCC security as “indivisible” and “a shared responsibility” and stressed the need to strengthen the bloc’s collective security framework.

On the mend: The statement, issued in the wake of Houthi attacks on Saudi Arabia, is another sign of improving ties between the UAE and Saudi after a strained stretch. The two already named defense a priority for cooperation after UAE Vice President and Deputy Prime Minister Sheikh Mansour bin Zayed Al Nahyan met Saudi Defense Minister Prince Khalid bin Salman last month.

ADIB puts dates on its AED 1.75 bn rights issue

Abu Dhabi Islamic Bank (ADIB) set the timetable for its AED 1.75 bn rights issue, with rights trading from 4-16 November and subscriptions open from 10-24 November, according to an ADX disclosure (pdf). Existing shareholders will receive one right for every 34.14 shares held, with the new shares priced at AED 16.45 apiece.

REMEMBER- Shareholders signed off on the rights issue last week, following board approval in August. The issue will add around 106.4 mn shares and lift issued capital by 2.929% to AED 3.738 bn. For a recent benchmark, Sharjah Islamic Bank’s AED 2.59 bn rights issue closed 3.2x oversubscribed earlier this year, with foreign investors accounting for 55% of demand.

Emirates Islamic eyes another sukuk offering

Emirates Islamic is testing investor appetite for another USD sukuk, with meetings kicking off today ahead of a potential five-year issuance, Zawya reports. The Fitch-rated A+ lender is considering fixed-rate, senior unsecured notes under its USD 4 bn certificate issuance program. The offering remains subject to market conditions, with its size and pricing yet to be determined.

REMEMBER- Emirates Islamic raised USD 500 mn through a sustainability-linked sukuk in September 2025, priced at 4.54%, or 95 bps over US Treasuries. The offering drew USD 1.2 bn in orders, 2.4 times the amount raised.

The market backdrop is tougher this time: Gulf bond and sukuk issuance fell 17.5% in 3Q amid higher borrowing costs. Investor demand and the final pricing will offer another indication of market appetite for regional debt.

ADVISORS- Our friends at Mashreq are joined by Abu Dhabi Islamic Bank, Arab Bank, Citi, Emirates NBD Capital, ICBC, KFH Capital, and Standard Chartered as joint lead managers and bookrunners.

UAE banks are paying up for deposits

UAE banks are raising deposit rates as lending growth outruns deposit growth and squeezes liquidity, Bloomberg reports, citing banks’ advertised offers and Central Bank of the UAE data. First Abu Dhabi Bank is offering 5.6% on new savings deposits through December, up from 4% in its previous campaign, while Emirates NBD is advertising as much as 5.5% on some larger new deposits. Credit grew 18.1% y-o-y in 2Q against roughly 14% growth in deposits, pushing the system’s loan-to-deposit ratio above 80%, from 77.7% in 2025.

That’s a sharp turn from the start of the year. In February, UAE lenders were sitting on comfortable loan-to-deposit ratios with room to keep expanding credit. By June, analysts were warning that liquidity pressure was building. Public-sector borrowing for infrastructure, including the “Zero Hormuz” push to bypass the strait, is keeping credit demand strong.

The funding side is tightening at the same time: The monetary base has fallen c. 13.5% since the war began, Jefferies’ Naresh Bilandani estimates. Central bank liquidity support introduced early in the war expired in September, and banks that tapped it now have to repay the funding, Bloomberg Intelligence analyst Edmond Christou says. Gulf money has also flowed out to an Indian program for non-resident USD deposits. Most of the c. USD 130 bn it raised came from the Gulf, Bloomberg reports, citing people it says are familiar with the matter.

The next read is what that does to bank margins: Bloomberg Intelligence says lenders are now paying a “liquidity premium” for fresh deposits. If funding costs keep rising faster than loan pricing, the same credit boom that has supported earnings could start squeezing spreads instead.

One petition down

Dutch court clears a hurdle in OCI’s merger with ADX-listed Orascom Construction: The Enterprise Chamber of the Amsterdam Court of Appeal has dismissed a petition from Dutch retail investor association VEB and shareholder Smits seeking an inquiry into OCI Global, and ordered them to pay jointly and severally some EUR 18k in costs, Amsterdam-listed OCI Global said in a statement (pdf) earlier this month.

REMEMBER- OCI and ADX- and EGX-listed Orascom Construction (ORAS), both controlled by Egyptian bn’aire Nassef Sawiris, are looking to merge into an Abu Dhabi-based infrastructure platform. The ruling removes one legal obstacle ahead of OCI’s shareholder vote on 30 October, though it doesn’t touch a separate petition Dutch investment company Value8 filed with the same court last month.

ORAS shareholders have already approved the merger — OCI holders would get 0.4634 ORAS shares for every OCI share — but it hit a wall over Sawiris’ position on both sides of the transaction. The Dutch court was concerned that OCI’s minority shareholders would be left holding Abu Dhabi-listed shares that most Dutch brokers can’t trade, with no option to cashout. ICYMI- That’s where NNS Holding came in. The Cyprus-incorporated arm of Sawiris’ family office is offering EUR 4.10 in cash for every OCI share, giving investors an alternative to the merger. But the merger can’t be completed until NNS has made the offer, declared it unconditional, and settled it — a condition the court-appointed directors attached at a shareholders’ meeting (pdf) in July. The deadline to accept the offer is 17 November, and NNS can extend it once by up to 10 weeks.

Could the Man City crisis have been averted?

Abu Dhabi-backed Manchester City held early-stage settlement talks with the Premier League before it was found guilty of breaching financial rules, Bloomberg reports, citing people in the know. The talks quickly broke down as the club insisted on its innocence. Given the scale of the case, a settlement likely would have reduced the penalties rather than eliminated them.

BACKGROUND- A Premier League-appointed commission ruled late last month that the club had inflated its revenue with disguised funding from Abu Dhabi to get around financial rules. City faces a points deduction, a heavy fine, or expulsion from the league. It has appealed, and a verdict is due by early February.

Why it matters for us: The case has become a UAE-UK issue. Emirati officials have warned London that a harsh ruling could cool their appetite for future large-scale UK investments. The UAE has put more than GBP 30 bn into UK sectors including defense, life sciences, and technology.

Data point

More than AED 106 mn — that’s the combined investment represented by 151 industrial licences in Abu Dhabi for projects that either entered construction or began production in 1H 2026, according to Abu Dhabi Registration Authority data cited by the Abu Dhabi Media Office. The emirate recorded a 5% y-o-y jump in new economic licences, driven primarily by micro-entrepreneurs and sole proprietors, while freelancer licences jumped 224% and new crafts and occupational licences rose 136%.

PSA

WEATHER- The mercury is set to hit 39°C in both Dubai and Abu Dhabi today, before dropping to 29°C overnight in Abu Dhabi and 30°C in Dubai, according to our favorite weather app.

The big story abroad

French President Emmanuel Macron said a major agreement on EU car policy would be finalized soon to protect the bloc’s automotive industry against fierce Chinese competition. Paris and Berlin are jointly working on the agreement, which is expected to delay the gradual end of combustion engines and support car production in Europe.

Tech investment firm Ithaca Holdings is in talks to take dating-app company Bumble private for around USD 1 bn. Bumble — whose market value stood at around USD 335 mn last Friday — has seen its shares drop over 90% since going public in 2021. Ithaca plans to use advanced technologies, including AI, across its investments.

Meta has launched Muse Wonder and Muse Wonder Full, describing them as its “most capable AI models yet”, as it ramps up its efforts to compete with Anthropic and OpenAI. Subscribers will be the first to see Muse Wonder, while the higher-capacity Muse Wonder Full model is currently available only to Muse Code subscribers.

The gas crunch gave Egypt every reason to speed up its energy transition, and the question now is who builds it and who pays for it.

Power Trip, our four-part signature series, turns this week to the transition and the private developers now building much of Egypt’s new power.

Issue II looks at how the deals behind these projects work, who is lending to them, and why the country is building a nuclear plant at El Dabaa alongside its solar and wind farms. We also look at whether the regional crisis has finally pushed industry toward renewables, and at the factories Egypt is counting on to build its own panels, batteries, and turbines.

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