Photo for illustrative purposes only

Islamic Finance

Saudi's NCB, Samba agree merger deal to create bank of $223 bln in assets

Saudi Arabia's National Commercial Bank and Samba Financial Group have agreed to merge, creating an institution with 837 billion riyals ($223 billion) in assets.

In a bourse filing on Sunday (Oct 11) NCB said it will pay Samba shareholders 0.739 new NCB shares for every one Samba share based on a value of 28.45 riyals. This is a 3.5% premium to Samba's closing share price on Oct 8, which was the last business day before the announcement of the merger. 

NCB chairperson Saeed Al-Ghamdi said the bank's aim is to create a "national champion" that can facilitate Saudi Arabia's economic transformation under its Vision 2030. 

"Saudi Arabia is undergoing a historic transformation with Vision 2030. Such a transformation requires a robust financial services sector, especially highly capitalised, resilient banks that can fund economic development, as well as support Saudi Arabia’s trade and capital flows with the region and the rest of the world," said Al-Ghamdi. 

On completion of the merger, NCB's existing shareholders will own 67.4% and Samba's shareholders will own 32.6% of the merged bank.

Major shareholders will be the Saudi sovereign wealth fund the Public Investment Fund (PIF) that will hold 7.4% and the General Organisation for Social Issuance will own 5.8%.

The merged bank will be Saudi Arabia's largest bank with market capitalisation of 171 billion riyals ($46 billion).

It will also own both NCB Capital Company and Samba Capital & Investment Management Company, that together will form the biggest asset manager, brokerage and investment bank in Saudi Arabia.

Key stats for the merged bank (data from NCB):

  • will become the Kingdom’s largest bank serving approximately 25% of the retail and wholesale banking market
  • local market share of 32% of Saudi banking assets
  • 468 billion riyals ($125 billion) in performing loans, representing a market share of 29%
  • around 568 billion riyals ($ 151 billion) in customer deposits, representing a market share of 30%
  • half-year operating income of around 15 billion riyals ($ 4 billion), which is a market share of 30%
  • net income of around 7 billion riyals ($ 2 billion), which is a market share of 38%
  • combined equity base of 120 billion riyals ($ 32 billion)

The merger is subject to regulatory approvals. 

NCB said it expects the merger to complete during the first half of 2021. 

© 2020 All Rights Reserved