Tag: Saudi

Year’s Biggest Bank Merger Sealed as Saudi Rivals Reach Deal

(Bloomberg) —

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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.



chart: New Pecking Order

© Bloomberg
New Pecking Order

“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.”

Read more: Moody’s Sees Virus and Oil Shocks Speeding Up Gulf Bank Mergers

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%,

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Sole survivor? Saudi Aramco doubles down on oil to outlast rivals

By Rania El Gamal, Davide Barbuscia and Marwa Rashad

DUBAI/RIYADH (Reuters) – The slump in demand for crude during the coronavirus pandemic has forced oil companies to contemplate the possibility that the fossil fuel market has peaked and the time for a global energy transition has come.

But Saudi Aramco plans to boost its production capacity so it can pump as much of Saudi Arabia’s vast oil reserves when demand picks up – before a shift to cleaner energy makes crude all but worthless, industry sources and analysts told Reuters.

With almost 20% of the world’s proven reserves and production costs of just $4 a barrel, Aramco believes it can undercut competitors and carry on making money even when lower oil prices make it unprofitable for rivals, the sources said.

Riyadh now plans to follow through on its apparent threat in March during an oil price war with Russia to raise its capacity to 13 million barrels a day (bpd) from 12 million bpd, officials and sources have said.

Aramco’s approach is in stark contrast to Western rivals such as BP and Shell which plan to curb spending on oil production so they can invest in renewable and green energy as they prepare for a low-carbon world.

With a renewed focus on oil, the state-run oil giant is also revising ambitious downstream expansion plans and now aims to grab assets in established projects in key markets such as India and China, rather than building expensive mega plants from scratch, the sources said.

“We expect oil demand growth to continue in the long term, driven by rising populations and economic growth. Fuels and petrochemicals will support demand growth … speculation about an imminent peak in oil demand is simply not consistent with the realities of oil consumption,” Aramco said in a

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Saudi Arabia’s BinDawood Holding prices IPO at 96 riyals a share -statement

DUBAI, Oct 7 (Reuters) – Saudi Arabian supermarket retailer BinDawood Holding has priced its initial public offering at 96 riyals ($25.59) a share, the company said on Wednesday.

The retailer, which owns the Danube and BinDawood supermarket brands, said the book-building process generated an order book of 106.9 billion riyals ($28.50 billion).

Subscriptions came from public funds, private funds and discretionary portfolios, non-Saudi investors and other investors, which include government institutions, private companies and financial institutions, it said.

“I am very pleased with the exceptionally strong demand we have witnessed for BinDawood Holding shares by institutional investors,” Ahmad Abdulrazzaq BinDawood, Chief Executive Officer, BinDawood Holding was quoted as saying. “We look forward to welcoming a diverse institutional shareholder base, that is committed for the long-term.”

($1 = 3.7508 riyals)

(Reporting by Hadeel Al Sayegh, editing by Louise Heavens)

(([email protected]; +971566883310;))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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INSIGHT-Sole survivor? Saudi Arabia doubles down on oil to outlast rivals

By Rania El Gamal, Davide Barbuscia and Marwa Rashad

DUBAI/RIYADH, Oct 7 (Reuters) – The slump in demand for crude during the coronavirus pandemic has forced oil companies to contemplate the possibility that the fossil fuel market has peaked and the time for a global energy transition has come.

But Saudi Aramco plans to boost its production capacity so it can pump as much of the kingdom’s vast oil reserves when demand picks up – before a shift to cleaner energy makes crude all but worthless, industry sources and analysts told Reuters.

With almost 20% of the world’s proven reserves and production costs of just $4 a barrel, Aramco believes it can undercut competitors and carry on making money even when lower oil prices make it unprofitable for rivals, the sources said.

Riyadh now plans to follow through on its apparent threat in March during an oil price war with Russia to raise its capacity to 13 million barrels a day (bpd) from 12 million bpd, officials and sources have said.

Aramco’s approach is in stark contrast to Western rivals such as BP BP.L and Shell RDSa.L which plan to curb spending on oil production so they can invest in renewable and green energy as they prepare for a low-carbon world.

With a renewed focus on oil, the state-run oil giant is also revising ambitious downstream expansion plans and now aims to grab assets in established projects in key markets such as India and China, rather than building expensive mega plants from scratch, the sources said.

“We expect oil demand growth to continue in the long term, driven by rising populations and economic growth. Fuels and petrochemicals will support demand growth … speculation about an imminent peak in oil demand is simply not consistent with the realities of oil

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Saudi non-oil private sector back to growth for first time since Feb – PMI

DUBAI, Oct 5 (Reuters) – Saudi Arabia’s non-oil private sector returned to growth in September for the first time in seven months, a survey showed on Monday, amid stronger demand after a loosening of lockdown measures imposed to stem the spread of the coronavirus.

The seasonally adjusted IHS Markit Saudi Arabia Purchasing Managers’ Index (PMI) rose to 50.7 from 48.8 in August, going above the 50 mark that separates growth from contraction for the first time since February, prior to the pandemic.

“Business activity in the Saudi Arabia non-oil private sector ticked up in September, supported by a return to sales growth as the economy started to find its footing after the COVID-19 lockdown,” said David Owen, economist at IHS Markit.

“In addition, the impact of a rise in VAT notably softened, after a sharp rise in prices and a dip in sales were seen in August. Cost inflation eased to just a marginal pace.”

Saudi Arabia, the world’s largest oil exporter, tripled VAT in July to 15% to boost state coffers badly hit by low oil prices and crude production cuts, in a move economists said will likely slow economic recovery from the coronavirus downturn.

Business conditions had deteriorated in August, partly because of the impact of VAT on consumer spending and on input costs for businesses.

In September the rise in input costs was much weaker as the tax impact eased considerably, said the survey. Job markets, however, remained subdued, with employment decreasing for the eight consecutive month.

Saudi Arabia said last week that unemployment among Saudi citizens rose to a record-high of 15.4% in the second quarter, while the economy shrank by 7%.

The Saudi economy still has “some way to go to fully recover,” said Owen.

“Output growth remains well below normal, and jobs are still

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