The Saudi British Bank announces the entry by its affiliates into an agreement for the sale and transfer of certain lines of business from HSBC Saudi Arabia to Alawwal INVEST Company
| Element List | Explanation |
|---|---|
| Introduction | The Saudi British Bank (“SABB”) announces the entry by its affiliates into a business transfer agreement (the “Agreement”) on 18 May 2021, relating to the sale and purchase of certain lines of business from HSBC Saudi Arabia (as “Seller”) (in which SABB owns 49% of the share capital) to Alawwal Invest Company (as “Buyer”) (in which SABB owns 100% of the share capital) (the “Transaction”). |
| Transaction Details | The acquisition of the following lines of business from the Seller to the Buyer: (1) the asset management business; (2) the retail margin lending business; and (3) the retail brokerage business (the “Transferring Business”). |
| Transaction Value | The estimated value of the Transaction is SAR 766,491,000. The value of the Transaction is subject to adjustments as provided in the Agreement. |
| Transaction Terms | Completion of the Transaction is subject to the Seller and Buyer obtaining applicable regulatory and corporate approvals, in addition to SABB’s general assembly authorizing the interests of certain directors in certain aspects of the Transaction. |
| Parties of the Transaction | Alawwal Invest Company and HSBC Saudi Arabia |
| Transaction Funding Method | The whole or part of the Transaction value will be funded by SABB by way of shareholder loan and/or equity injection into the Buyer. |
| Transaction Execution Date | 2021-05-18 Corresponding to 1442-10-06 |
| Description of the Business of the Asset forming the Subject Matter of the Transaction | The business of the assets forming the subject matter of the Transaction comprise the: (1) asset management business; (2) retail margin lending business; and (3) retail brokerage business of HSBC Saudi Arabia. |
| Asset Book Value | The net book value of the Transferring Business was SAR 646,491,000 as of 31 December 2020. |
| Financial Statements for the Last Three Years of the Asset forming the Subject Matter of the Transaction | Not applicable to SABB. The financial statements which cover, among other things, the assets forming the subject matter of the transaction, are prepared at the Seller level and do not refer to the assets on a separate and specific basis. |
| Transaction reasons | The Transaction will allow the Seller to become a smaller, less complex business and simpler to manage. On the other hand, the Proposed Transaction will allow the Buyer to focus solely on asset management and servicing retail clients across margin lending and brokerage solutions.
The Transaction will also help the Seller and the Buyer capitalise on the opportunities presented by Saudi Vision 2030. The Transaction constitutes a reorganization of the securities business conducted by the Seller and the Buyer reflecting the strategy of the two parties, their future plans and serving the interests of the SABB group in general. |
| Expected Impact of the Transaction on the Company and Its Operations | The Transaction is not expected to have an impact on SABB or its operations. |
| Details of Using The Proceeds of the Asset Sale | Not applicable to SABB. |
| Related Parties | SABB owns 100% of the Buyer and 49% of the Seller. HSBC Holdings plc (which is a substantial indirect shareholder of SABB, owning 31%) indirectly owns 51% of the Seller.
Mr. David Dew (the Managing Director and a Board member of SABB), Mr. Majed Najm (the Deputy Managing Director Corporate & Institutional Banking) and Mr. Mohammad Alshayea (a representative director of SABB in the Seller’s board of directors) are all members of the Board of Directors of HSBC Saudi Arabia. |
| Additional Information | Material announcements relating to the Transaction will be announced in due course. |
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