National Commercial Bank, Saudi Arabia’s biggest lender, agreed to merge with Samba Financial Group in a deal that will create the Arab world’s third-biggest banking entity with assets worth $223 billion.
Samba shareholders will receive 0.739 newly issued NCB shares in exchange for each Samba share they hold, according to the definitive terms agreed on by the two lenders, NCB said in a statement to the Tadawul Stock Exchange, where its shares trade.
Based on the exchange ratio and the closing price of 38.50 Saudi riyals ($10.24) per NCB share on October 8 – the last business day before the announcement – each Samba share is valued at 28.45 riyals and Samba’s issued ordinary share capital at about 55.7bn riyals, according to NCB.
This ratio represents a premium of 3.5 per cent on Samba's closing share price of 27.50 riyals on the same day, it said.
“NCB would also like to announce its firm intention to proceed with the merger,” the lender said in the bourse filing.
The merger will result in all Samba assets and liabilities being transferred to NCB, it said.
Once the transaction is complete, only NCB will survive while Samba “will cease to exist”. Its shares will be cancelled and new shares in NCB will be issued to its shareholders.
The new lender will have its headquarters in Riyadh, with Ammar Alkhudairy tipped to become chairman while Saeed Al-Ghamdi managing director and group chief executive.
"It's an interesting move and I think it's warranted," said Ramzi Abu Khadra, a veteran banker in the kingdom and the region. "There is a lot of consolidation happening globally on the back of economies of scale, lowering costs, technology and compliance. It's a wave that has hit the world in many places."
The creation of a much larger institution gives the merged bank greater pricing power over loans and deposits, EFG Hermes said in June.
A deal also increases cross-selling potential, allowing the lender to devote more resources towards digitisation and increasing its counterparty lending limits.
On top of this, a merger “potentially unlocks cost synergies”, EFG Hermes said.
Hettish Karmani, head of research at U-Capital in Muscat, said smaller banks are expected to follow the merger and acquisition route to emerge stronger in the face of Covid-19 headwinds.
“The [NCB and Samba] merger will create an [entity that has] roughly one third of all banking assets in kingdom ... the bigger and stronger the entity, the more flows they will generate from foreign institutional investors, which will aid in the growth, efficiency and profile of the market,” Mr Karmani said.
The two lenders said on June 25 that they had agreed on a framework for a reciprocal due diligence process and a definitive and binding agreement for the tie-up within four months.
The merged entity will have a combined equity base of $32bn and will control a quarter of the kingdom’s retail and wholesale banking market.
However, the deal is subject to customary regulatory and shareholder approval.
Mr Al-Ghamdi, NCB's current chairman, said the kingdom is currently undergoing a historic transformation.
“Such a transformation requires a robust financial services sector, especially highly capitalised, resilient banks that can fund economic development, as well as support Saudi Arabia’s trade and capital flows with the region and the rest of the world,” he said.
“Our ambition is to create a national champion that can [help bring about] the transformation envisaged under Vision 2030 and create a pioneer for next-generation banking services that nurtures tomorrow’s industry leaders.”
Both NCB and Samba have government entities as significant shareholders. Upon completion of the merger, NCB’s existing shareholders will own 67.4 per cent of the combined entity and Samba’s shareholders will own 32.6 per cent.
The biggest shareholders in the new lender will be the kingdom’s sovereign wealth fund, the Public Investment Fund with a 37.2 per cent stake. The Public Pension Agency will control 7.4 per cent and the General Organisation for Social Insurance will own 5.8 per cent.
“This merger process marks the start of a new era for Saudi banking,” said Mr Alkhudairy, Samba Financial Group's current chairman.
“We are focused on making sure that the combined and larger bank comes together seamlessly to serve our customers, partners, investors and talent across both teams.”
Wayne Rooney's career
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Company name: Fine Diner
Started: March, 2020
Co-founders: Sami Elayan, Saed Elayan and Zaid Azzouka
Based: Dubai
Industry: Technology and food delivery
Initial investment: Dh75,000
Investor: Dtec Startupbootcamp
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UAE currency: the story behind the money in your pockets
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Who was Alfred Nobel?
The Nobel Prize was created by wealthy Swedish chemist and entrepreneur Alfred Nobel.
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The specs
Engine: 2.0-litre 4-cyl, 48V hybrid
Transmission: eight-speed automatic
Power: 325bhp
Torque: 450Nm
Price: Dh289,000
AWARDS
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AI traffic lights to ease congestion at seven points to Sheikh Zayed bin Sultan Street
The seven points are:
Shakhbout bin Sultan Street
Dhafeer Street
Hadbat Al Ghubainah Street (outbound)
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Al Dhafra Street
Rabdan Street
Umm Yifina Street exit (inbound)
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Two stars
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Founder: Ahmed Wadi
Launched: 2016
Employees: 76
Financing stage: Series A ($4 million)
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England squad
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Defenders: Trent Alexander-Arnold, Conor Coady, Marc Guehi, Reece James, Harry Maguire, Tyrone Mings, Luke Shaw, John Stones, Ben White
Midfielders: Jude Bellingham, Conor Gallagher, Mason Mount, Jordan Henderson, Declan Rice, James Ward-Prowse
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Key findings of Jenkins report
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FIXTURES
UAE’s remaining fixtures in World Cup qualification R2
Oct 8: Malaysia (h)
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Nov 12: Thailand (h)
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The Specs
Engine 3.8-litre, twin-turbo V8
Transmission: eight-speed automatic
Power: 582bhp (542bhp in GTS model)
Torque: 730Nm
Price: Dh649,000 (Dh549,000 for GTS)
Director: Laxman Utekar
Cast: Vicky Kaushal, Akshaye Khanna, Diana Penty, Vineet Kumar Singh, Rashmika Mandanna
Rating: 1/5
Full list of Emmy 2020 nominations
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Ted Danson, The Good Place
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Eugene Levy, Schitt’s Creek
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Christina Applegate, Dead to Me
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Jimmy Kimmel Live
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Steve Carell, The Morning Show
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Billy Porter, Pose
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Shira Haas, Unorthodox
Regina King, Watchmen
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Mrs. America
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Watchmen
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The Good Place
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The Kominsky Method
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The Handmaid’s Tale
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Arsenal 1 (Aubameyang 12’) Liverpool 1 (Minamino 73’)
Arsenal win 5-4 on penalties
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Red flags
- Promises of high, fixed or 'guaranteed' returns.
- Unregulated structured products or complex investments often used to bypass traditional safeguards.
- Lack of clear information, vague language, no access to audited financials.
- Overseas companies targeting investors in other jurisdictions - this can make legal recovery difficult.
- Hard-selling tactics - creating urgency, offering 'exclusive' deals.
Courtesy: Carol Glynn, founder of Conscious Finance Coaching
MATCH INFO
Sheffield United 0 Wolves 2 (Jimenez 3', Saiss 6)
Man of the Match Romain Saiss (Wolves)
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