Merger with SABB to take one year, says Alawwal chairman

The merger process between Alawwal Bank and Saudi British Bank is expected to take around one year, Mubarak Al-Khafrah, chairman of Alawwal Bank told Argaam.

A board of directors and a managing director will be named by year-end, he added.

The banks’ decision to merge was driven by a number of factors, most importantly, the  goal of the two lenders to create a new well-positioned banking entity.

“The merged entity will map out new strategies and long- as well as short-term plans to provide a diversified suite of financial products in line with Saudi Vision 2030,” Al-Khafrah said.

The due diligence for the merger is being conducted with the participation of advisors like Goldman Sachs Group and JPMorgan, he added.

Talks on the proposed merger between Alawwal Bank and SABB are at an advanced stage, and a preliminary share exchange ratio has been agreed, the lenders said last week.

The boards of two banks have reached a preliminary, non-binding agreement on the share exchange ratio, subject to a number of important steps that includes completion of confirmatory due diligence, finalization of the merger agreement and agreement on a number of other commercial issues.

The merged bank is set to become the Kingdom’s third largest lender by assets.

It will focus on developing small and medium-cap segments and help finance new large-scale investments, particularly those agreed on during the Crown Prince’s visit to the US and Europe, Al-Khafrah said.

“The potential merger will likely cut consumer and administrative expenses,” Al-Khafrah noted, adding that a firm is currently working on a new name for the merged bank, in line with the visions of both banks.