Saudi Arabia’s Alawwal Bank formally merged on Sunday with Saudi British Bank (Sabb) to create the third-biggest lender by assets in the kingdom.
“Following regulatory and shareholder approvals, the banks have now become a single-listed company," the lenders said in a joint statement.
The two financial institutions will continue to operate as separate entities and offer their respective products and services until they fully integrate their back office operations, the lenders said.
“We have combined two great banks, each with a rich history and legacy of playing key roles in the kingdom’s development,” said Lubna Olayan, the chairwoman of Sabb. “We will be the best place to bank and the best place to work in the kingdom, for a new generation of Saudi men and women and for the new era of development under Vision 2030.”
In October, the boards of the two lenders approved the merger, which is estimated to save 10 to 15 per cent of the 2017 combined cost base of Sabb and Alawwal. The union of the two banks is expected to take about two years from the date of the formal merger, Soren Nikolajsen, managing director of Alawwal Bank, told The National in January.
The culmination of the deal is the latest in the six-member economic block of GCC. Bank mergers in the Arabian Gulf are picking up pace as lenders combine their balance sheets to gain scale in a bid to better face tougher market conditions.
It follows Abu Dhabi Commercial Bank’s tie-up with Union National Bank and subsequent takeover of Al Hilal bank as its Sharia-compliant arm in the UAE. National Commercial Bank’s bid to acquire its smaller competitor Riyad Bank is the latest consolidation deal in the kingdom. In the UAE, Dubai Islamic Bank, the biggest Sharia-compliant lender in the country, has recommended its board to take over rival Noor Bank.
With the combination of the two lenders under the statutory merger, Sabb will absorb Alawwal Bank’s assets and liabilities. The transaction was executed through a share swap, with Alawwal Bank shareholders receiving 0.485 Sabb shares for each Alawwal Bank share.
“As the largest shareholder in the combined bank, HSBC fully supports this merger and believes that it will create a stronger bank to support Saudi Arabia’s economic transformation,” said HSBC group chief executive John Flint.
The merged bank will have total revenues of 10.9 billion Saudi riyals (Dh10.7bn), more than a million retail customers and the second-largest corporate book by assets. The combined bank, with a total asset base of 257bn riyals, will have 168bn riyals of customer loans and 195bn riyals of deposits, the banks said.
“Our focus now is on our customers while at the same time completing the integration process and executing our vision of being the leading international bank in the kingdom,” said David Dew, managing director at Sabb.