Creating a powerhouse - Both National Commercial Bank and Samba already have quite a sizable share of the local banking space. A merged entity will deliver additional synergies. Move could also prompt others to consolidate as size will matter. Image Credit: AFP

Dubai: One of the biggest banking entities in the Middle East is being launched, with Saudi Arabia's National Commercial Bank (NCB) and Samba Financial Group (Samba) getting shareholder approval for the merger. The merged entity - Saudi National Bank - plans to start operations on April 1 and will have Riyadh as headquarters.

At separate extraordinary general assembly meetings held on March 1, shareholders of NCB and Samba voted "overwhelmingly" in favor. This follows earlier clearance of all regulatory approvals, including from the Saudi Central Bank (SAMA), General Authority for Competition (GAC), Capital Markets Authority (CMA), and Tadawul.

Saudi National Bank will be "optimally positioned to compete regionally and locally," said a statement.

To prepare for the merger, NCB received approval from CMA to increase its capital from SR30 billion to SR44.78 billion to issue new shares in NCB to Samba shareholders. The share swap ratio is 0.739 of NCB ordinary shares for each Samba ordinary share.

Biggest by some distance
Saudi National Bank will be the largest bank in Saudi Arabia with over SR896 billion ($239 billion) in assets, SR127 billion ($34 billion) in shareholders’ equity, and a combined net profit of SR15.6 billion ($4.2 billion).

The Saudi National Bank will be the number one Saudi bank with an estimated 30 per cent market share and "benefit from increased scale". Samba shares will be de-listed from Saudi Stock Exchange (Tadawul) on the effective date of the merger and the company dissolved with all assets, liabilities and operations transferring into Saudi National Bank.

"The result of the vote at the EGA (extraordinary general assembly) speaks volumes of how attractive the value proposition for this merger is," said Saeed Al-Ghamdi, Chairman of NCB. "Saudi National Bank will deliver value not just for our esteemed shareholders, customers, and employees, but for the nation as a whole."

Banking stocks

This is a historic milestone for the Saudi banking sector, which will now have a powerhouse that is truly ‘a bank for all’. Saudi National Bank will unlock significant opportunities as a larger and exceptionally well-capitalized bank

- Ammar Alkhudairy, Chairman of Samba,