In order to meet the actual needs of Saudi Arabia’s economic development stage, to effectively meet the needs of large-scale projects in Saudi Arabia, and to meet the needs of individuals and institutions, on October 11, 2020, in accordance with the Saudi Company Law and the Financial Market Administration’s Mergers and Acquisitions Regulations, the Saudi state Commercial bank NCB and Saudi American Banking Group Samba have signed a binding merger agreement under which the two banks will merge into the new NCB bank.

After the transaction is completed, NCB and Samba will each account for 67.4% and 32.6% of New Bank’s capital. Saudi Public Investment Fund PIF holds 37.2%, PPA holds 7.4%, and General Social Security Administration GOSI holds 5.8%.

The new bank’s assets are expected to reach 837 billion riyals (approximately US$223.2 billion), accounting for 32% of the total assets of Saba Bank; capital of 44.7 billion riyals (approximately US$11.92 billion); market capitalization of 468 billion rials (Approximately US$125 billion), accounting for 29% of the total market capitalization of Shaban Bank; deposits amounted to 568 billion riyals (approximately US$151 billion), accounting for 30% of Shabank’s total deposits; net income reached 7 billion rials (Approximately US$2 billion), accounting for 38% of the total net income of Shaban Bank. The new bank will become the largest bank in Saudi Arabia by assets, capital, loans, deposits and market capitalization, and the highest net income bank in the Middle East.

Some economists said that the merger of the two banks into a powerful entity is a win-win move that meets the actual needs of Saudi Arabia's economic development stage, can effectively meet the needs of large-scale projects in Saudi Arabia, and can enhance the new bank's ability to meet the needs of individuals and institutions. However, it is also recommended to take measures to maintain the competitiveness of the banking industry, avoid industry monopolies, protect SME financing, and ensure that personal and real estate loans are not negatively affected.

Ahmed Sheri, an expert on economic policy and business strategy management, believes that the merger of the two banks is in line with the "vision 2030" and will help increase their profits and share values, highlighting Saudi Arabia's preparations for further opening up to the global economy.

On the one hand, the merger of the two banks will greatly promote the economic and social development, effectively meet the needs of large-scale projects in Saudi Arabia, and meet the needs of individuals and institutions. On the other hand, it will also inject new impetus into the economic development of the region. Editor/Sang Xiaomei