Daily Management Review

Saudi Arabia’s largest bank to create a megacreditor


National Commercial Bank (NCB), the largest bank in Saudi Arabia, has begun merger talks with Riyad Bank, reports Bloomberg.

As a result of the transaction, the third largest bank in the Gulf countries with assets of 685 billion riyals ($ 183 billion) can be created.

Negotiations are at an early stage and may not lead to a deal, the NCB said.

The lender noted that he had agreed to this step with the central bank and that a potential transaction would not lead to the forced dismissal of staff.

Saudi Arabia’s sovereign fund, which owns stakes in some of the largest lenders, is studying which banks can be combined to scale up and increase competitiveness, sources told Bloomberg.

The Saudi Arabian Government Investment Fund (PIF) owns about 44% of the National Commercial Bank and 22% of Riyad Bank. The market value of NCB is $ 38 billion, Riyad Bank is $ 14 billion.

There is a wave of bank mergers in the Gulf region, after two of the largest banks in the United Arab Emirates merged to create First Abu Dhabi Bank last year, Reuters reported.

Consolidation has increased over the past two years, as profitability declined due to lower government and consumer spending amid low oil prices.

While there are 50 lenders in the UAE, there are only 12 commercial banks in Saudi Arabia. Their number will be reduced to 11, due to the fact that Saudi British Bank and the smaller Alawwal Bank have agreed to unite, creating the third largest bank in the kingdom.

source: bloomberg.com