The National Commercial Bank (NCB), Saudi Arabia’s largest bank by assets, entered a framework agreement on June 25 with Samba Financial Group, fourth largest bank by assets, to commence the due diligence process and cover definitive and binding terms for a potential merger. Samba shareholders will get 0.736-0.787 newly issued shares of NCB in exchange for every share they hold in Samba, and, if the deal is completed, this would value Samba shares with a 27.5% premium to its closing price on June 24.
Once the deal is completed, the two banks would have a combined asset value of $213.8 billion, solidifying its position as the largest bank by assets in Saudi Arabia and making it the third largest bank by assets in the Gulf region, after Qatar National Bank ($264.9 billion in assets) and First Abu Dhabi Bank ($227.4 billion in assets). The potential merger represents a trend in the Gulf countries of bank consolidations due to low oil prices and slow economic growth.
The Public Investment Fund (PIF), the country’s sovereign wealth fund, has a 44.29% stake in NCB and 22.91% stake in Samba.