UAE-based First Abu Dhabi Bank (FAB) has reportedly initiated the sale of a stake in its payments unit Magnati, which specialises in direct acquiring, issuer processing, and acquiring processing.

A potential deal could value the business at around $1bn, Bloomberg reported citing unnamed sources aware of the development.

The banking group hired Morgan Stanley to identify potential investors for the unit, which is anticipated to garner interest from players in the financial industry and also private equity firms.

According to the sources, FAB is planning to retain a stake in the firm after any deal.

They also added that the talks are currently in progress and no final decision has been made on the scope of the potential stake sale.

Representatives for FAB and Morgan Stanley did not comment on the news.

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FAB established Magnati as a fully owned subsidiary in April this year to tap the rapidly expanding payments market.

Leveraging technologies such as APIs, artificial intelligence and machine learning, the Magnati payments platform allows users to boost their core business by monetising data.

It also provides capabilities to partner with FinTechs on product and service development.

The latest news comes as banks seek to offload operations as they struggle to compete with specialist providers.

Recently, Reuters reported that Italian payment firm Nexi is in discussions to buy a stake in Greece-based Alpha Bank’s payment business.

In 2015, private equity firms Warburg Pincus and General Atlantic purchased a stake in the payments firm Network International, backed by Emirates NBD Bank.

Last year, Mastercard partnered with Mashreq Bank to launch a new digital payments solution for small and medium-sized businesses in the UAE.