NCB Tie-up with Samba to Create Gulf's 3rd Largest Bank

The National Commercial Bank (NCB), the largest lender in Saudi Arabia said on Sunday it had entered into a merger agreement with the "Samba Financial Group" to create a joint entity with assets worth $223 billion (837 billion Saudi riyals).

Weak economic growth due to the corona crisis, as well Low oil prices are driving bank consolidation in the rich Gulf, creating the third largest bank in the region, after Qatar National Bank (QNB) and First Abu Dhabi Bank of the UAE (FAB).

Recently, Saudi Arabia has encouraged integration into the banking sector to persify its oil-dependent economy.

NCB- said in a statement - that it had agreed to pay 28.45 riyals for each share of Samba, whose value is estimated at 55.7 billion riyals ($14.85 billion), corresponding to a 3.5% premium to Samba's stock closing price.

NCB said that the merged bank will become the largest in Saudi Arabia and one of leading banks in the Middle East, with a market cap of 171 billion riyals.

The sovereign wealth fund in Saudi Arabia, and the Public Investment Fund (PIF) are major investors in both banks, with a 44.29% stake in NCB and 22.91% in Samba.

Following the merger deal, PIF will own a 37.2% stake in the new entity while other substantial, and the Saudi Public Pension Agency with a 7.4%, while the General Organisation for Social Insurance (GOSI) will hold a 5.8% stake.

"Shareholders will receive 0.739 new NCB shares for every one share of Samba," NCB pointed out.

The chairman of Samba’s board of directors Ammar Alkhudairy will be the chairman of the merging entity, while the current chairman of NCB Saeed Al-Ghamdi will be the managing director and chief executive officer.

Finally, NBC pointed out that it does not expect the merger to lead to involuntary layoffs.