The Middle East has witnessed one more merger in the banking sector. Saudi British Bank (SABB), a subsidiary of HSBC Holdings, and Alawwal Bank have legally combined their businesses upon receiving regulatory and shareholder approvals.
The new entity has become the third largest lender in the Kingdom, which has seen mergers pick up within the banking sector over the last two years.
The two banks said that they will continue to operate a normal service while work continues to fully integrate their products and services.
The combined bank has total assets worth $68 billion, $44.8 billion in customer loans and $52 billion in customer deposits. It will have total revenues of SAR 10.9 billion. HSBC Holdings will continue to be a shareholder in the new bank, a statement said.
A merger of SABB and Alawwal will also help stakeholders tap into a demand for a digital bank suitable for a young tech-savvy population of millennials.
Saudi Arabia has been a fast mover in digital banking space with 76% of consumers using digital banking platforms, according to a survey by ArabNet. A recent report by German software giant SAP revealed that the Kingdom was the top digital banking market in the MENA region.
“We have combined two great banks, each with a rich history and legacy of playing key roles in the Kingdom’s development,” said Lubna S. Olayan, Chair of SABB. “Now our size, enhanced capabilities and fantastic talent will help us build on that history and legacy to become the bank of choice for a modern Saudi Arabia.
"We will be the best place to bank and the best place to work in the Kingdom, for a new generation of Saudi men and women and for the new era of development under Vision 2030.”
The new entity will also have a significant retail and wealth management business and will have more resources to innovate and connect a young, tech savvy population.
A new board and leadership team are in place, overseeing the integration of the two banks, which is expected to take between 18 and 24 months.