Dubai: The Boards of Directors of The Saudi British Bank (SABB) and Alawwal Bank have approved a merger agreement, according to a joint statement from both entities.
Post-merger, the new entity will become Saudi Arabia’s third-biggest lender with a market capitalisation of about $17.2 billion (Dh63.18 billion).
The combined bank is expected to be a leader in corporate banking, foreign exchange, cash management and trade finance, with a robust retail franchise.
The merger, subject to shareholder and regulatory approval, will create the Kingdom’s third-largest bank, a top tier retail and corporate bank, and provide unrivalled access to a global banking network to facilitate the flow of investment capital into Saudi Arabia and the growth of international trade.
Value of merged assets (in riyals)
“The combination of SABB and Alawwal Bank will create a powerful banking franchise ready to fuel growth in the Kingdom. As Vision 2030 transforms Saudi Arabia, our own transformation will ensure our customers capture the opportunities of a more diverse, accessible and investible Saudi economy. The new bank will be a leader in responsible lending and will set new standards for financial awareness and literacy.” SABB Chairman Khalid Sulaiman Olayan said.
The combined bank is expected to be a leader in corporate banking, foreign exchange, cash management and trade finance, with a robust retail franchise underpinning aspirations to be the Kingdom’s leader in wealth management, all supported by online and mobile services that deliver the best banking experience in the digital age.
HSBC’s share in merged entit
“Together, we will set new standards for customers by pooling the talents and experience of two of the Kingdom’s longest-established banks. By building on our shared heritage of innovation, we will ensure we are the best place to bank and the best place to work in Saudi Arabia,” said Alawwal Bank Chairman Engr. Mubarak Abdullah Al Khafrah.
The combined bank will set new standards in training and talent development and offer exciting career opportunities in a much larger organisation. No involuntary staff redundancies are expected as a result of the merger.
“Our combined bank is expected to deliver attractive long-term shareholder value, generating new growth by ensuring our customers have access to a full suite of services. This transformational merger creates a leader in the Kingdom’s financial sector development,” Al Khafrah said.
Under the deal that was announced in May, Alawwal’s assets and liabilities will be transferred to SABB, the larger of the two lenders, the banks said.
There will be no immediate change for customers as a result of today’s announcement. Both banks will remain independent and continue to operate a business-as-usual service until the merger has completed.
Thursday’s announcement follows the May 16 announcement by SABB and Alawwal Bank on the Tadawul website of a non-binding agreement between the two banks. The deal values each Alawwal Bank share at 16.26 riyals (Dh15.94; $4.34) and Alawwal’s existing issued ordinary share capital at around 18.6 billion riyals, the statement said.
On completion of the merger, SABB’s existing shareholders will own 73 per cent of the combined bank and Alawwal’s shareholders will own 27 per cent on a fully diluted basis.