JEDDAH, 7 May 2003 — The National Commercial Bank, one of the largest in the Kingdom, will float its shares for public subscription next year, according to Abdul Hadi Shayif, the bank’s general manager and a member of its executive committee.
“I believe that the shares will be floated for public subscription next year but it’s up to the owners to make the decision,” he told Asharq Al-Awsat, a sister publication of Arab News.
“But one thing I can say is that the bank’s financial and administrative position is now more suitable than at any time before to conversion to an open joint stock company,” Shayif said.
The NCB general manager favored the merger of Saudi and other Arab banks. “If all the Arab banks merge with one another they would still not reach the status of the world’s second or third bank,” he said.
“If we want to play a bigger role other than a merely national and regional one, the local banks should merge. This will be necessary if they want to face the competition when the Kingdom joins the World Trade Organization,” he added.
“Unfortunately, local and Arab banks have no such agenda,” he said.
Shayif said migration of funds was an international phenomenon. “When local funds go away new funds will come from abroad looking for opportunities,” he said, referring to American and European investments in the Kingdom.
He underscored the “tremendous” progress in banking services for women. “Today 35 percent of Saudi banks have set up special branches for women clients. We have female experts to provide consultation and financial information to women. There are also special banking products for women,” he said, adding that NCB is to open more women’s branches.
Shayif disclosed that neither Khaled Binmahfouz, the bank’s former owner, nor his sons retain any shares in the bank. “The general assembly will meet this month to endorse the bank’s future plans and announce the new owners,” he said.
The general manager also said NCB was planning to establish a project similar to the bank for the poor. He also highlighted NCB’s efforts to promote Islamic banking by offering new products.
The state-owned Public Investment Fund has a 69.3 percent stake in NCB’s capital worth SR6 billion. The General Organization for Social Insurance holds 10 percent while 24 individual shareholders 20.7 percent.
Within three years after the formation of the new board under the chairmanship of Abdullah Bahamdan, the bank secured a profit of SR2.5 billion and a revenue of not less than 25 percent on shareholders’ rights.
“What has happened in the bank (over the past three years) is a radical change, covering all banking services including administration and operations, technological development, etc.” He said the bank also focused on training Saudi manpower to provide more efficient services.
Shayif said NCB was studying accusations that Saudi banks are not supporting small business organizations. “We have established two departments to finance small firms and individuals,” he added.
In a related development, Finance Minister Dr. Ibrahim Al-Assaf said the program to provide finance to small and medium-scale firms would be funded by the state and banks.
“Saudi banks will contribute SR100 million to the fund’s SR200 million capital while the state will provide the rest,” he said.
The Finance Ministry has entrusted the Saudi Industrial Development Fund (SIDF) with the task of providing finances to small-and medium-sized enterprises.
Al-Assaf said the SIDF would provide guarantees for loans to small and medium establishments.
Saleh Abdullah Al-Naeem, the fund’s director-general, said his organization was ready to provide guarantees. The executive laws for the program, under which banks will provide loans of up to SR2 million, are already in place.
