NCB and Samba announce merger to form Saudi Arabia’s $220 billion mega-bank

The merger will create Saudi Arabia's largest bank. (Reuters/File)
Short Url
Updated 12 October 2020

NCB and Samba announce merger to form Saudi Arabia’s $220 billion mega-bank

  • Merger of NCB and Samba creates ‘national champion and regional powerhouse’

DUBAI: Two of Saudi Arabia’s biggest banks signed a deal on Sunday for a merger to create a “national champion” for the Kingdom and a “regional powerhouse” for the Middle East.

National Commercial Bank, the oldest in the country, is to combine with Samba Financial group in a $32 billiondeal that will create the most profitable bank in the region. Together, they will control $223 billion in assets.

The merger is part of the financial sector development program of the Vision 2030 strategy to diversify the economy, and is the second big banking merger of the past 12 months. It is likely to lead to other major tie-ups in the Kingdom’s financial sector as the Vision plan unfolds.

Account holders and employees are likely to benefit from cost reductions and efficiency gains from the deal, which will involve “no involuntary job losses” from either bank, a joint statement said.

Saeed Mohammed Al-Ghamdi, the chairman of NCB who will become managing director and group chief executive officer of the merged banks, said: “Saudi Arabia is undergoing a historic transformation with Vision 2030. Such a transformation requires a robust financial services sector, especially highly capitalized, resilient banks that can fund economic development, as well as support Saudi Arabia’s trade and capital flows with the region and the rest of the world.

“Our ambition is to create a national champion that can facilitate the transformation envisaged under Vision 2030 and create a pioneer for next-generation banking services that nurtures tomorrow’s industry leaders.”

Ammar Alkhudairy, chairman of Samba who will assume the same position at the new bank, said: “Our merger with NCB will create a local leader and a regional powerhouse that can unlock considerable value for shareholders, provide exceptional banking services for the people of Saudi Arabia and help local entrepreneurs capitalize on opportunities for domestic and international business growth.

“This merger process marks the start of a new era for Saudi banking supporting the realization of many Vision 2030 goals. We are focused on making sure that the combined and larger bank comes together seamlessly to serve our customers, partners, investors and talent across both teams.”

The new bank is expected to come into existence next year, assuming regulatory and shareholder approvals are forthcoming. It will have a market share of about 25 per cent of retail and corporate banking in Saudi Arabia, and a commanding position in trade finance and investment banking.

The Public Investment Fund, Saudi Arabia’s sovereign  wealth fund, is a major shareholder in both NCB and Samba.

The merger will result in savings and efficiencies of $213 million a year, leading one analyst to conclude that other similar mergers could follow.

Tarek Fadlallah, chief executive of Nomura Asset Management in the Middle East, told Arab News: “This shows the extent to which the banking sector has scope to increase efficiencies, and may encourage further mergers.”


China aims for sustained and healthy economic development

Updated 30 October 2020

China aims for sustained and healthy economic development

  • Beijing to let market forces play decisive role in resources allocation, report says

BEIJING: China is targeting sustained and healthy economic development in the five years to 2025, with an emphasis on a higher quality of growth, the Xinhua news agency said on Thursday, citing the ruling Communist Party’s Central Committee.

President Xi Jinping and members of the Central Committee, the largest of the ruling party’s elite decision-making bodies, met behind closed doors from Monday to lay out the 14th five-year plan, a blueprint for economic and social development.

China’s external environment “is getting more complicated,” the agency said, adding, “There is a significant increase in instabilities and uncertainties.”

BACKGROUND

China aims to boost its gross domestic product (GDP) per person to the level of moderately developed countries by 2035, while GDP is due to top 100 trillion yuan ($15 trillion) in 2020.

However, the country’s development was still in a period of important strategic opportunities, despite new challenges, it said.

It added that China aims to boost its gross domestic product (GDP) per person to the level of moderately developed countries by 2035, while GDP is due to top 100 trillion yuan ($15 trillion) in 2020.

China will also deepen reforms and let market forces play a decisive role in resources allocation, the agency said.

China will promote a “dual circulation” model, make self-sufficiency in technology a strategic pillar for development, move to develop and urbanize regions, and combine efforts to expand domestic demand with supply-side reforms, it added.

The “dual circulation” strategy, first proposed by Xi in May, envisages that China’s next phase of development will depend mainly on “domestic circulation” or an internal cycle of production, distribution and consumption, backed by domestic technological innovation.