The deal highlights a tendency for financial lending institutions in Saudi Arabia to strengthen the sector at a time when the Kingdom is trying to overcome the repercussions of the economic slowdown due to the Corona virus and the decline in oil prices.
A joint statement by the National Commercial Bank and Samba Group stated that the two institutions had signed a “binding merger agreement.”
If shareholders agree to the deal, the merger will lead to the creation of the largest bank in Saudi Arabia.
The value of the deal is estimated at 55.7 billion riyals (14.9 billion dollars), according to the statement.
The statement stated that the merger “will lead to the formation of a strong regional financial facility with an asset value of 837 billion Saudi riyals equivalent to 223 billion US dollars, which will place the merging bank in a distinguished position capable of enhancing its contribution to the positive transformation of the banking sector in the Kingdom and contributing to the realization of the Kingdom’s 2030 vision.” .
“The Kingdom of Saudi Arabia is witnessing a historic transformation through the Kingdom’s Vision 2030,” said National Bank Board Chairman Saeed bin Muhammad Al-Ghamdi.
“Our ambition is to establish a pioneering national financial entity that supports the realization of the transformation that the Kingdom’s Vision 2030 aims to be the first to innovate for advanced banking services and a nucleus for building future leaders in the banking sector,” Al-Ghamdi added.
The statement added that the new entity would be a “catalyst for achieving many of the goals of the Kingdom’s 2030 vision.”
Saudi Arabia, the world’s largest oil exporter, is seeking to cut its spending by more than 7 percent next year, with the budget deficit expected to rise to 12 percent of GDP in 2020.
In parallel, the government is awarding billions of dollars in contracts to establish major projects, including the future project of “Neom” in the northwest of the kingdom, which is estimated to be worth 500 billion dollars.
Last month, Moody’s credit rating agency had expected Saudi Arabia and the Gulf region to witness a “wave of mergers and acquisitions” due to the decline in oil prices, deteriorating economic conditions and fierce competition between banks.
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