Saudi Arabia’s biggest bank NCB in merger talks with rival Riyad

Saudi investors monitor stocks at the exchange market department at the National Commercial Bank (NCB) in Riyadh. (File photo/AFP)
Updated 24 December 2018
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Saudi Arabia’s biggest bank NCB in merger talks with rival Riyad

RIYADH/DUBAI: Saudi Arabia’s National Commercial Bank (NCB), the Kingdom’s biggest lender by assets, has begun preliminary discussions to merge with smaller rival Riyad Bank, the two lenders said on Monday.
A merger would further extend NCB’s lead over its closest rivals including Al-Rajhi Bank, by boosting its assets by almost a third to 685 billion riyals ($183 billion)
The move comes two months after Saudi British Bank (SABB) and smaller rival Alawwal Bank agreed a binding deal to create Saudi Arabia’s third-biggest lender in the first major tie-up for the country’s banking sector in recent times.
NCB said any agreement would be subject to regulatory and shareholder approvals, and there would be no forced job losses.
Both banks have a common shareholder in sovereign fund Public Investment Fund (PIF), which could make the merger easier, said Mazen Al-Sudairi, head of research at Al-Rajhi Capital.
PIF owns 44 percent of NCB and 22 percent of Riyad Bank, according to Thomson Reuters data.
“They also have similar exposure to retail and corporate sectors. This will create synergy and efficiency,” Al-Sudairi said.
Analysts 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.
A wave of bank mergers are taking place in the Gulf region, after two of the United Arab Emirates’ biggest banks linked up to create First Abu Dhabi Bank last year
Consolidation has increased in the past two years as profit margins have been squeezed by lower government and consumer spending in the face of weak oil prices.
However unlike the UAE, which has 50 banks, Saudi Arabia has only 12 commercial lenders, which will be reduced to 11 after the completion of merger between SABB and Alawwal.


US-China trade deal hopes grow as oil prices decline

Updated 19 June 2019
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US-China trade deal hopes grow as oil prices decline

  • Data suggested a smaller-than-expected fall in American crude inventories
  • Preparations underway for Donald Trump to meet Xi Jinping next week at the G20 summit in Osaka

LONDON: Oil prices declined on Wednesday as data suggested a smaller-than-expected fall in American crude inventories, as hopes for a US-China trade deal continue to grow.
Brent crude futures were down 51 cents at $61.72 a barrel.
US West Texas Intermediate crude fell 25 cents to $53.65 a barrel. On Tuesday, it had recorded its biggest daily rise since early January.
After weeks of swelling, US crude stocks fell by 812,000 barrels last week to 482 million, the American Petroleum Institute said on Tuesday, a smaller fall than the 1.1-million-barrel drop analysts had expected.
Official estimates on US crude stockpiles from the US government’s Energy Information Administration are due during afternoon trading.
US President Donald Trump offered some support, saying preparations were underway for him to meet Chinese President Xi Jinping next week at the G20 summit in Osaka, Japan, amid hopes a trade deal could be thrashed out between the two powers. Trump has repeatedly threatened China with tariffs since winning office in 2016.
European Central Bank President Mario Draghi also offered a boost, saying on Tuesday that he would ease policy again if inflation failed to accelerate.
Tensions remain high in the Middle East after last week’s tanker attacks. Fears of a confrontation between Iran and the US have mounted, with Washington blaming Tehran, which has denied any role.
Trump said he was prepared to take military action to stop Iran having a nuclear bomb but left open whether he would approve the use of force to protect Gulf oil supplies.
On Wednesday, oil markets shrugged off a rocket attack on a site in southern Iraq used by foreign oil companies.
“It is interesting to note that the crude oil futures market could not rally on hawks planting bombs in the Strait of Hormuz but could rally on doves planting quantitative easing,” Petromatrix’s Olivier Jakob said in a note.
“This is an oil market that doesn’t know how to react when an oil tanker blows up but knows how to react when the head of a central bank makes some noise.”
Members of the Organization of the Petroleum Exporting Countries have agreed to meet on July 1, followed by a meeting with non-OPEC allies on July 2, after weeks of wrangling over dates.
OPEC and its allies will discuss whether to extend a deal on cutting 1.2 million barrels per day of production that runs out this month.