National Commercial Bank, Saudi Arabia’s largest lender by assets, agreed to buy rival Samba Financial Group for $15 billion in the biggest banking takeover this year.
NCB will pay 28.45 riyals ($7.58) for each Samba share, according to a statement on Sunday, valuing it at about 55.7 billion riyals. The kingdom’s sovereign wealth fund, the biggest single shareholder in the two banks, will have the largest stake in the combined entity with 37.2%.
The new bank will have total assets of more than $220 billion, creating the Gulf region’s third-largest lender. Its $46 billion market capitalization nearly matches that of Qatar National Bank QPSC, which is still the Middle East’s biggest lender with about $268 billion of assets.
Banks in the oil-rich Gulf have been combining as regional economies suffer the twin shocks of lower energy revenues and the global coronavirus pandemic. The Saudi consolidation also coincides with a long-awaited wave of banking mergers in Europe, where lenders are exploring tie-ups or have begun taking over smaller rivals.
“Under NCB’s management, better value should be realized from Samba’s over-capitalized assets,” CI Capital analysts including Sara Boutros said in a note to clients. “The deal also provides NCB with a larger capacity to grow more aggressively, particularly in the corporate space, as the market stabilizes and as lending opportunities emerge.”
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Merging two major domestic banks is a key component of Crown Prince Mohammed bin Salman’s “Vision 2030” initiative to diversify the Saudi economy away from oil by creating local champions in industries such as finance. Besides the Public Investment Fund, the largest shareholders in the combined NCB-Samba entity will include the Saudi Public Pension Agency, which will own 7.4%,