Saudi Arabia’s biggest lender NCB in merger talks with rival Samba

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Saudi Arabia’s biggest lender NCB in merger talks with rival Samba

The Jeddah-based Saudi Arabia’s largest lender by total asset and the second-largest by market cap, National Commercial Bank, often dubbed as AlAhli Bank, said on Thursday that the financial services provider had signed off an initial merger accord with a smaller Saudi-based lender Samba Financial Group, which in effect would create a $214 billion entity in terms of total assets.

Besides, according to the Jeddah-based Saudi’s largest financial institution, National Commercial Bank, the financial terms of the merger deal would value each Samba shares at $7.82 per share, proffering a market valuation of $15.63 billion, roughly 27.5 per cent above of its current market valuation of $12.3 based on Wednesday’s closing price.

Saudi’s NCB set to become third-largest Gulf lender after Samba merger

On top of that, while a multi-year low oil and natgas futures’ prices alongside a bleaker economic outlook had been pushing major regional lenders to consolidate their footings, had the NCB-Samba merger deal been taken place, it would be creating the third-largest lender in the Gulf by assets after Qatar National Bank alongside UAE’s First Abu Dhabi Bank.

Aside from that, in a regulatory filing with the Riyadh stock exchange, the National Commercial Bank was also quoted saying that it had rubber stamped a framework accord for a potential merger deal with Samba, formerly known as the Saudi American Bank having branches across 66 locations in the Kingdom of Saudi Arabia.

In tandem, a source familiar with the matter had also told on Thursday that the merger would create an entity with a lending portfolio of 432 billion Saudi Riyals, while NCB has a market valuation of roughly $30 billion, nearly 2 and a half fold that of Samba.

The Saudi Arabia’s sovereign wealth fund, widely known as the Public Investment Fund or PIF, a potential stakeholders in both of the financial institutions, holds a stake of 44.29 per cent in National Commercial Bank and 22.91 per cent in Samba.