Bloomberg/Simon Dawsonby Kudakwashe Muzoriwa
National Commercial Bank (NCB), the Kingdom’s biggest lender, has ended talks to merge with Riyad Bank.
In separate bourse filings, NCB and Riyad Bank said, “The boards of both banks have decided to end preliminary merger talks and not to continue with the merger study.”
The Public Investment Fund, the Kingdom’s sovereign wealth fund that holds stakes in some of the biggest lenders, owns 44 per cent of NBC and around 22 per cent of Riyad Bank.
The GCC financial services industry is witnessing a wave of consolidation as banks seek ways to improve competitiveness and boost capital amid slowing economic growth.
In June 2019, Saudi British Bank (SABB) and Alawwal merged their businesses after receiving regulatory and shareholder approvals, creating the third-largest bank by assets in the Kingdom.
In the UAE, the Abu Dhabi government completed the merger of Abu Dhabi Commercial Bank, United National Bank and Al Hilal Bank following the successful tie-up of its two major banks in 2017.
The Dubai Islamic Bank’s (DIB) Board of Directors recently approved the terms of the proposed merger with privately-owned Noor Bank. DIB’s board approved a share swap that will see it offering one new share in the Shari’ah-compliant bank for every 5.49 Noor Bank shares. The deal will be satisfied through the issuance of 651 million new DIB shares.
Similarly, the Central Bank of Kuwait ‘conditionally’ approved the proposed merger between Kuwait Financial House (KFH) and Bahrain’s Ahli United Bank (AUB). CBK granted KFH permission to acquire 100 per cent of the capital shares of AUB and the approval shall be conditional upon fulfilling certain requirements by the central bank.
Moody’s said that the outlook for GCC banks remains stable, except Oman, underpinned by solid economic growth as well as the banks’ strong capital buffers and substantial liquidity.
The merger was expected to create a combined bank holding $183 billion in assets and to further extend NCB’s lead over its closest rivals, such as Al Rajhi Bank, by boosting its assets by almost a third to SAR 685 billion.
NCB stated that it is committed to become the region’s leading financial services group by implementing its sustainable growth strategy, while Riyad Bank said it will continue to develop its products, services and technologies that serve the interests of its customers, shareholders and employees.