Photo for illustrative purposes only. The NCB Capital Investment Bank HQ in Riyadh, Saudi Arabia, on September 13, 2019. Volodymyr Dvornyk/Shutterstock

Islamic Finance

Saudi’s NCB, Samba discussing mega merger to create bank of $214 bln in assets

Saudi Arabia’s National Commercial Bank and Samba Financial Group are discussing a potential merger that would create a bank holding some 802 billion riyals ($214 billion) in assets.

NCB and Samba on Thursday (June 25) said in separate filings on Tadawul that they had entered into a framework agreement to start the due diligence process and negotiations for a potential merger.

The proposal is for Samba investors to receive newly-issued NCB shares in exchange for their existing shares.

NCB will issue between 1.441 billion shares and 1.54 billion new shares at 37.25 riyals per share, which was the closing price of each NCB share on June 24. At the top end, this will value the deal at 57.365 billion riyals ($15.3 billion).

The two banks intend to conclude the deal in four months.

NCB held 535 billion riyals ($143 billion) in assets at the end of March, making it the Kingdom’s largest bank by assets. Its smaller rival Samba held 267 billion riyals ($71 billion) in assets at the end of the first-quarter.

NCB last year held merger talks with Riyad Bank but ended them in December. Riyad Bank is roughly the same size as Samba Financial Group, holding 280 billion riyals in assets at the end of March.

NCB has appointed J.P. Morgan Saudi Arabia as its financial advisor, and Abuhimed Alsheikh & Alhagbani Law Firm as its legal advisor.

Samba has appointed Morgan Stanley Saudi Arabia as its financial advisor, and Khoshaim & Associates as its legal advisor.

Banks in the Gulf Cooperation Council have been consolidating, with the latest completed deal being Oman Arab Bank’s acquisition of Alizz Islamic Bank, which created a bank holding 3.2 billion rials ($8.32 billion) in assets.

Prior to this, Dubai Islamic Bank completed its acquisition of Noor Bank, resulting in around $75 billion in merged assets.

Kuwait Finance House said in April its deal to acquire Bahrain’s Ahli United was temporarily suspended because of the disruption of work activities due to the COVID-19 pandemic. A KFH-Ahli United merged bank will have assets of around $101 billion.

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