Riyad Bank in Saudi Arabia. Riyad Bank and Saudi Arabia’s National Commercial Bank (NCB) said on Monday they had scrapped talks to merge their businesses Image Credit: Gulf News Archives

Dubai: Saudi Arabia’s National Commercial Bank (NCB), the kingdom’s biggest lender by assets, and its smaller rival, Riyad Bank, said on Monday they had scrapped talks to merge their businesses.

The merger talks, which had begun last year, was expected to create a combined entity with over $180 billion in assets.

“The boards of both banks have decided to end preliminary merger talks and not to continue with the merger study,” the two lenders said in separate regulatory filings, without detailing why the talks had fallen through.

Analysts had earlier said Riyad could benefit from NCB’s strong balance sheet given it has a high loan to deposit ratio, while NCB could use Riyad’s expertise in growing its long-term deposits.

The talks of NCB and Riyad Bank combining their businesses came amid multiple bank mergers in the Middle East. Saudi British Bank (SABB) and its smaller rival Alawwal Bank combined this year to create the kingdom’s third-biggest lender and two of the UAE’s banks tied up to create First Abu Dhabi Bank, the emirate’s fifth biggest lender.

Both NCB and Riyad Bank have a common shareholder, sovereign fund Public Investment Fund (PIF), which owns close to 45 per cent in NCB and 22 per cent in Riyad Bank. PIF, which owns stakes in some of the biggest lenders in the kingdom, has been reportedly looking into possible mergers between local lenders but unlike the UAE, which has 50 banks, Saudi Arabia has only 11 commercial lenders.