JEDDAH, 15 August 2004 — Efforts are under way to establish a new commercial bank, the Kingdom’s 11th, with a capital of SR3 billion and merging eight leading money exchangers in the country. The founders will have a 50 percent stake in the new Al-Bilad Bank, to be launched by the middle of next year, and the rest will be floated for public subscription.
Representatives of the eight firms have already signed the merger agreement. The firms are: Muhammad & Abdullah Ibrahim Al-Subaie Company, Al-Muqairen Money Exchange (run by the heirs of Abdul Aziz ibn Suleiman Al-Muqairen), Al-Rajhi Trading Est., Al-Rajhi Commercial Foreign Exchange, Muhammad Saleh Sairafi Est., Abdul Mohsen Saleh Al-Amri Est., Injaz Money Exchange (Yousuf Abdul Wahab Niamatullah Company), and Ali Hazza & Partners for Trade and Money Exchange.
The Council of Ministers approved on June 7 the establishment of the new bank, which is to focus on Islamic banking services. Half of the bank’s 60 million shares would be floated for public subscription in November at the rate of SR50 per share.
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 activities of the merging money exchangers will be stopped, they will be stripped of their commercial registrations and their outlets will be closed soon after the announcement of the new company,” the Cabinet said. It also said that the new company would pay damages for the cancellation of contracts with the merged firms and settle all entitlements of staff in accordance with the Labor Law.
According to Al-Eqtisadiah business daily, a sister publication of Arab News, Al-Subaie company will hold 42 percent shares allocated for the owners. Al-Muqairen will have more than 17 percent stake and Al-Rajhi Trading 14 percent, Al-Rajhi Commercial Foreign Exchange 13 percent, Sairafi five percent, Injaz three percent, Al-Amri one percent and Hazza 0.5 percent.
Abdul Aziz Al-Subaie, a member of the founding committee, said he expected that merger procedures would be completed within two months, adding that public subscription of its shares would start after Ramadan.
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, a press statement issued by the founders said.
“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 marketing services. “Banks have started expanding their Islamic banking services and we are banking on the success of Islamic banking products,” he pointed out.
“Al-Bilad will have 40 to 50 branches in the first year,” said Niamatullah, adding that they will operate in the existing offices of the eight firms.
