Saudi banking mega merger reflects Kingdom’s reform agenda

Olaya District Street with Modern Buildings In Riyadh, Saudi Arabia. (Shutterstock)
Updated 05 October 2018
0

Saudi banking mega merger reflects Kingdom’s reform agenda

  • Prominent Saudi businesswoman Lubna Al-Olayan will become the first woman to chair a publicly traded company in the Kingdom
  • Both the merger and the appointment of Al-Olayan are significant in the context of Saudi Vision 2030

LONDON: Saudi British Bank (SABB) and Alawwal bank have agreed to merge to create the third biggest lender in the Kingdom in the latest move toward banking industry consolidation.
Prominent Saudi businesswoman Lubna Al-Olayan will become the first woman to chair a publicly traded company in the Kingdom when she is appointed to the role at the enlarged lender that will have SR268 billion ($71 billion) in assets.
Both the merger and the appointment of Al-Olayan are significant in the context of Saudi Vision 2030, the country’s social and economic reform blueprint that has a major focus on developing the financial services sector as well boosting the representation of women on boards.
The proposed merger, which is still subject to shareholder and regulatory approval, coincides with a number of financial sector reforms in Saudi Arabia.
“Our bank will supply entrepreneurs with the financial tools needed to grow and create jobs and we will have enhanced capacity to underwrite large-scale transactions to support infrastructure and privatization projects,” said SABB Chairman Khaled Olayan.
No involuntary staff redundancies are expected as a result of the merger, the pair said in a statement on Thursday. Neither will there be any immediate change for customers as both banks will remain independent until the merger has completed.
Banks throughout the Gulf are mulling merger deals as the industry reacts to both changing economic realities and the advance of digital banking that is replacing many of the roles that previously required staff.
“When banks merge the key savings are on employee costs given the service oriented nature of this sector,” Mazen Alsudairi head of research at Al Rajhi Bank, told Arab News.
“So, as per the merger announcement and our calculations, around SR450 million to SR650 million are the savings expected in the future for the combined entity.”
Alawwal shares closed almost 3 percent higher on Thursday following the announcement while SABB closed about 1.1 percent lower.
SABB shareholders will own about 73 percent of the enlarged lender with Alawwal shareholders holding 27 percent.
SABB Managing Director David Dew will be the managing director of the combined entity.
The proposed merger comes as the Saudi banking sector emerges from four tough years as a low oil price, reduced government spending and payment delays took their toll on the banking sector, encouraging lenders to look at how they could cut costs.
“Given the current economic scenario, we don’t see any meaningful improvement in asset quality compared to the last quarter and thus expect provisions to be in the similar range as seen in the first couple of quarters,” Al Rajhi said in its sector report released last month.
The appointment of Al-Olayan to chair the enlarged bank follows other high profile moves by women to senior roles in the country’s financial services sector, including Sarah Al-Suhaimi who heads the Tadawul stock exchange.


Can a hungry Mali turn rice technology into ‘white gold’?

Updated 20 October 2018
0

Can a hungry Mali turn rice technology into ‘white gold’?

  • Malians are cautiously turning to a controversial farming technique to adapt to the effects of climate change
  • Dubbed the System of Rice Intensification (SRI), the new method was pioneered in Madagascar in 1983

BAGUINEDA: When rice farmers started producing yields nine times larger than normal in the Malian desert near the famed town of Timbuktu a decade ago, a passerby could have mistaken the crop for another desert mirage.
Rather, it was the result of an engineering feat that has left experts in this impoverished nation in awe — but one that has yet to spread widely through Mali’s farming community.
“We must redouble efforts to get political leaders on board,” said Djiguiba Kouyaté, a coordinator in Mali for German development agency GIZ.
With hunger a constant menace, Malians are cautiously turning to a controversial farming technique to adapt to the effects of climate change.

 

Dubbed the System of Rice Intensification (SRI), the new method was pioneered in Madagascar in 1983. It involves planting fewer seeds of traditional rice varieties and taking care of them following a strict regime.
Seedlings are transplanted at a very young age and spaced widely. Soil is enriched with organic matter, and must be kept moist, though the system uses less water than traditional rice farming.
Up to 20 million farmers now use SRI in 61 countries, including in nearby Sierra Leone, Senegal and Ivory Coast, said Norman Uphoff, of the SRI International Network and Resources Center at Cornell University in the US.
But, despite its success, the technique has been embraced with varying degrees of enthusiasm. Uphoff said that is because it competes with the improved hybrid and inbred rice varieties that agricultural corporations sell.
For Faliry Boly, who heads a rice-growing association, the prospect of rice becoming a “white gold” for Mali should spur on authorities and farmers to adopt rice intensification.
The method could increase yields while also offering a more environmentally-friendly alternative, including by replacing chemical fertilizers with organic ones, he said.
He also pointed out that rice intensification naturally lends itself to Mali’s largely arid climate.

FACTOID

Up to 20 million farmers now use rice intensification in 61 countries, including in nearby Sierra Leone, Senegal and Ivory Coast.