Huge M&A deal in the Saudi banking industry

National Bank of Commerce Saudi Arabia (NCB) said the $ 223 billion merger would make the NCB-Samba alliance become the largest commercial bank in Saudi Arabia.

The NCB-Samba alliance becomes the largest commercial bank in Saudi Arabia. Source: Reuters

The National Commercial Bank of Saudi Arabia (NCB) announced on October 11 that it is promoting a merger agreement with Samba Financial Group to create a combined financial entity with total assets worth up to 837 billion riyal (223 billion USD).

Once completed, the NCB-Samba alliance will be the third largest lender in the Gulf region by asset size, after the National Bank of Qatar and the First Bank of Abu Dhabi of the United Arab Emirates. (UAE).

Under the agreement, NCB agreed to pay riyal 28.45 for each Samba share, worth about 55.7 billion riyal ($ 14.85 billion).

The NCB said the merger would make the NCB-Samba alliance the largest commercial bank in Saudi Arabia, and the leading lender in the Middle East with 171 billion riyal market capitalization.

In the Gulf area, low oil prices and weaker economic growth are factors driving the merger activities of many banks.

For Saudi Arabia alone, it also encourages mergers in the banking industry to create financial entities that can support the role of the private sector, accelerating the diversification of the economy. economy and reduce dependence on oil.

Currently, the Saudi Arabia Public Investment Fund (PIF) is a key investor in both NCB and Samba, holding 44.29% of shares in NCB and 22.91% in Samba, respectively.

Upon completion of the merger process, PIF will own a 37.2% stake in the new business.

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