JEDDAH, 12 May 2003 — The government is expected to sell 50 percent of its stake (20.97 million shares) in the National Commercial Bank to Saudis next year, Al-Eqtisadiah business daily, a sister publication of Arab News, reported yesterday, quoting informed sources.

The report comes after Abdul Hadi Shayif, the bank’s general manager and a member of its executive committee, announced last week that NCB was planning to float its shares for public subscription next year.

“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 said. “But one thing I can say is that the bank’s financial and administrative position is now better than at any time before conversion to an open joint stock company,” Shayif said.

The state-owned Public Investment Fund now holds 69.3 percent of NCB shares. The fund purchased 50 percent of the bank in 1999. NCB has a capital of SR6 billion.

“The fund increased its stake last year to 69.3 percent after purchasing the shares owned by Khaled Bin Mahfouz and his family in the bank in a SR7 billion deal at the rate of SR400 per share,” the business daily said.

The General Organization for Social Insurance (GOSI) has a 10 percent stake in the bank. The remaining 20.7 percent shares are owned by 24 individual shareholders. The sources said the government would allocate part of the shares offered for public subscription to GOSI and the Pensions Fund.

Economic analysts said that the bank was likely to sell the shares for SR350 to SR450 per share. At the same time, the analysts did not rule out the possibility of selling the shares at less than the market rate to encourage Saudis to purchase them. However, analyst Khaled Al-Jowhar said the share prices could go up to SR500 because of the bank’s strong economic position and the profits it has earned.

Bishr Bakheet, another analyst, expects a good response similar to Saudi Telecom Company (STC), especially if the shares are floated at a reasonable price.

Finance Minister Dr. Ibrahim Al-Assaf said STC’s flotation of 30 percent was oversubscribed. The sell-off, the Kingdom’s largest in two decades, involved the sale of 90 million of the company’s 300 million shares. He said the sales generated more than SR36 billion ($9.6 billion) in revenues.

“At close of the IPO, the value of requests filed by citizens was SR36 billion. The process was a huge success,” said the minister.

NCB posted a first quarter profit of SR742.6 million this year and annual profit of SR2.4 billion last year.

Within the last three years after the formation of the new board under the chairmanship of Abdullah Bahamdan, the bank made 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,” Shayif said.