Banking



December 25, 2018,   2:00 PM

Saudi Arabia’s banking industry re-shaped

Ahmed Mabrouk

FULL BIO

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Saudi Arabia’s biggest lender National Commercial Bank has begun preliminary discussions to merge with Riyad Bank.

Both banks issued separate statements to the Saudi Stock exchange where both are traded and confirmed that The talks are at an initial stage and may not result in a merger, NCB said any agreement would be subject to regulatory and shareholder approvals.

Both banks confirmed that if the merger happens, there will be no force dismissal for Saudi employees. Both banks claim they have a high Saudization ratio of more that 93%.

If this merger was agreed on, this will re-shape the banking sector in Saudi Arabia as this will enhance NCB as the biggest listed Saudi bank in terms of assets, revenues and net income. Also this would create a huge financial institution with assets more than $175 Billion.

 

Both banks are majority owned by the Saudi government, as government institutions own 47.8% of Riyadh bank and 64.5% of NCB, and it is worth mentioning that the Saudi Public Investment Fund is the biggest investor in both institutions with 21.75% in Riyad bank and 44.29% in NCB. Also Public Pension Agency and the General Organization for Social Insurance invest in both banks.

 

NCB is considered to be the largest and the first to officially be licensed and operate in Saudi Arabia with 5.4 million customers serving them through a wide network of 400 branches all over the kingdom and 3,488 ATM.

Riyad Bank is one of the largest financial institutions in the Kingdom of Saudi Arabia, with more than 5,600 employees and serve its employees through through a network of more than 340 branches, in addition to more than 2,592 ATMs.

The move comes few months after Saudi British Bank and Alawwal Bank agreed a binding deal to create Saudi Arabia’s third-biggest lender in the first major deal for the country’s banking sector in recent times.

Also the negotiations came in line with a wave of bank mergers in GCC, after two of the United Arab Emirates’ biggest banks (FGB) AND (NBAD) linked up to create the biggest listed entity in UAE First Abu Dhabi Bank last year.

 



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