NCB, Riyad Bank merger to form GCC biggest lender

NCB, Riyad Bank merger to form GCC biggest lender

By: Elsayed Gamal

Riyadh – Mubasher: National Commercial Bank (NCB), Saudi Arabia’s biggest lender, and Riyad Bank announced the beginning of negotiating a potential merger that may be implemented over the coming period.

If completed, the consolidation of the two banks will be the second merger announcement in the oil-rich kingdom after Alawwal Bank and the Saudi British Bank (SABB) began tie-up discussions in October.

The assets of the new entity established by the unity of Riyad Bank NCB will hit SAR 685.05 billion ($182.68 billion), according to Mubasher’s statistics.

The statistics further noted that the new entity’s capital will be the largest in the GCC at a value of SAR 60 billion.

It is noteworthy that NCB’s total assets reached SAR 459.08 billion, while Riyad Bank’s assets amounted to SAR 225.97 billion by the end of September.

How analysts see NCB - Riyad Bank merger?

This deal is considered positive for the Saudi Stock Exchange (Tadawul) and it will help in achieving Saudi Vision 2030 that aims to launch strong and large entities in the banking sector, capital market analyst Mohammed Al-Shimmery told Mubasher.

If the two lenders complete their merger, the new entity’s assets will reach SAR 685 billion, Al-Shimmery added.

The potential merger of NCB and Riyad Bank will boost the capital of the two banks to SAR 60 billion, financial analyst Khaled Alzaydi told Mubasher.

This transaction is forecast to propel other banks to mull merger deals in a bid to increase competitiveness in the sector, Alzaydi added, forecasting that total assets of the new merger to hit SAR 100 billion that in return will help the banks implement further expansion.

NCB last reported a net profit of SAR 2.45 billion ($650 million) in the third quarter of 2018, up 15.43% from SAR 2.126 billion ($570 million) in the same period of 2017, while Riyad Bank’s profits rose 8.17%,registering SAR 1.16 billion from July to September, against SAR 1.8 billion.

Translated by: Mohammad Hesham Azab