Monday, October 12, 2020

Saudi’s NCB buys Samba in US$15b bank merger

The merged entity will have more than US$223 billion in assets, it added, making it the kingdom’s biggest lender. — Reuters pic
The merged entity will have more than US$223 billion in assets, it added, making it the kingdom’s biggest lender. — Reuters pic

RIYADH, Oct 12 — Saudi Arabia’s National Commercial Bank (NCB) yesterday said it will purchase rival lender Samba in a deal valued at around US$15 billion (RM62 billion) to create what would be the kingdom’s largest bank.

The deal underscores a push by financial lenders to consolidate as the kingdom grapples with the twin shocks of a coronavirus-led economic slowdown and low crude oil prices.

“The National Commercial Bank and Samba financial group today announced that they have entered into a binding agreement to merge,” the banks said in a joint statement.

“If approved by shareholders and regulators, the merger will bring together two highly complementary banks to create Saudi Arabia’s largest bank.”

The deal is valued at about 55.7 billion riyals (US$14.9 billion), the statement said.

The merged entity will have more than US$223 billion in assets, it added, making it the kingdom’s biggest lender.

The banks said the deal was aligned with de facto ruler Crown Prince Mohammed bin Salman’s Vision 2030, an ambitious plan to diversify the kingdom’s oil reliant economy.

“Saudi Arabia is undergoing a historic transformation with Vision 2030,” NCB’s chairman Saeed Mohammed al-Ghamdi was quoted as saying in the statement.

“Our ambition is to create a national champion that can facilitate the transformation.”

The statement said the new bank will support the kingdom’s “landmark deals and mega projects”, which are aimed at diversifying the economy.

The world’s top crude exporter says it plans to slash government spending by more than seven per cent next year as the budget deficit is expected to widen to 12 per cent of gross domestic product in 2020.

But simultaneously, the government is awarding multi-billion — dollar contracts for planned mega projects including NEOM, a US$500 billion futuristic megacity in the kingdom’s northwest.

The bank merger had been rumoured for months.

“A combination of lower oil prices, deteriorating economic conditions and fierce competition among banks is driving a new wave of mergers and acquisitions in Saudi Arabia and across the wider Gulf region,” ratings agency Moody’s said last month. ­— AFP




Source: Malay Mail

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