JEDDAH, 9 September 2004 — The newly established Al-Bilad Bank, which has a capital of SR3 billion, will float 30 million shares worth SR1.5 billion for public subscription either by the end of October or early November, press reports said.

The new commercial bank, the Kingdom’s 11th, was established merging eight leading money exchangers in the country including Muhammad & Abdullah Ibrahim Al-Subaie Company, Al-Muqairen Money Exchange, Al-Rajhi Trading Est., and Al-Rajhi Commercial Foreign Exchange.

The bank is expected to launch its operations in the first quarter of next year. Representatives of the eight firms will meet in Riyadh on Saturday to discuss important issues including the date of the flotation, the bank’s emblem, payment of capital and advertising campaign.

Abdul Rahman Al-Ruwaitie, economic adviser to the bank, expected that Al-Bilad’s shares would be oversubscribed by 250 percent as a result of high liquidity. Al-Bilad will open a new era of banking in the country, he said, adding that it would support the private sector by offering new services and Islamic banking products.

The Kingdom’s Council of Ministers approved on June 7 the establishment of the new bank. Half of the bank’s 60 million shares would be floated for public subscription at the rate of SR50 per share, the Saudi Press Agency said.

The move comes after the government licensed three major international banks — Deutsche Bank of Germany, BNP Paribas Bank of France and J.P. Morgan Chase Bank of the United States - to open branches in the Kingdom. The founders will have a 50 percent stake in the bank. Muhammad & Abdullah Ibrahim Al-Subaie Company holds the lion’s share of 42 percent in Al-Bilad Bank while Al-Muqairen Money Exchange holds18 percent, Al-Rajhi Commercial Foreign Exchange 16 percent, and Al-Rajhi Trading Est. 14 percent.

Other partners Muhammad Saleh Sairafi Est. will have a five percent stake in the bank while Injaz Money Exchange (Yousuf Abdul Wahab Niamatullah Company) will hold three percent, Abdul Mohsen Saleh Al-Amri Est. and Ali Hazza & Partners for Trade and Money Exchange one percent each, Okaz daily reported.

Abdul Aziz Al-Subaie, a member of the founding committee, said he expected that merger procedures would be completed within two months.

Based in Riyadh, Al-Bilad will have branches in various parts of the Kingdom and will make use of modern technology and trained personnel to extend quality services. In the first phase it will have 30 to 40 branches.

“The new bank will operate on the basis of Islamic banking principles,” Dr. Yousuf Niamatullah of Injaz said, adding that it would also provide investment services.

The activities of the merging money exchangers will be stopped and they will be stripped of their commercial registrations, the Cabinet said, adding that their outlets will be closed soon after the formation of the new company. The new company will pay damages for the cancellation of contracts with the merged firms and settle all entitlements of staff in accordance with the Labor Law.

The founders have set up a committee of experts to recruit qualified and experienced staff for the new bank.