What would be the size of NCB-Samba new merged entity?

25/06/2020 Argaam Special

 

National Commercial Bank (NCB), Saudi Arabia’s biggest lender by assets, signed a framework agreement with Samba Financial Group, the Kingdom’s fifth largest lender, on June 25 to begin due diligence process, and negotiate definitive and binding terms of a potential merger.

 

The merger would create the largest bank in Saudi Arabia with assets of up to SAR 802 billion ($214 billion).

 

It would also create the Gulf's third largest bank by assets, and the second largest bank in terms of loan and deposits portfolio. The current capital of the new entity would be the largest in the region.

 

NCB and Samba’s combined market capitalization, based on closing prices on Thursday, June 27, stood at SAR 159 billion ($42.5 billion), creating the fourth largest bank by market value in Saudi Arabia.

 

Balance Sheet in Q1 2020 (SAR bln)

 

NCB

Samba

Merged Entity

Assets

535.01

267.08

802.09

Customer deposits

375.24

177.71

552.95

Loans

305.21

147.82

453.04

Capital*

30.00

20.00

50.00

         
 

*Total capital based on exchange ratio range (Samba shareholders will receive between 0.736 and 0.787 newly issued share of NCB in exchange for every share held)

 

According to Argaam’s date, the new entity would be the Gulf's third largest bank by assets, after Qatar National Bank and the UAE's First Abu Dhabi Bank. The merged entity will have $213.9 billion assets.

 

The GCC region’s top 15 lenders will include six players from Saudi Arabia, five from the UAE, and two from Kuwait and Qatar each.

 

The Gulf’s Top 15 Banks by Assets in Q1 2020 ($ bln)

 

Order

Bank

Country

Assets

1

QNB

Qatar

264.9

2

First Abu Dhabi Bank

UAE

227.5

3

NCB-Samba merged entity

Saudi Arabia

213.9

4

Emirates NBD

UAE

188.5

5

ADCB

UAE

112.3

6

Al Rajhi

Saudi Arabia

104.5

7

NBK*

Kuwait

95.1

8

DIB

UAE

75.3

9

Riyad

Saudi Arabia

74.6

10

SABB

Saudi Arabia

70.7

11

KFH*

Kuwait

63.0

12

BSF

Saudi Arabia

53.1

13

ANB

Saudi Arabia

49.3

14

QIB

Qatar

45.6

15

Mashreqbank

UAE

44.3

         

*December 2015 data

 

In terms of total deposits, the new entity will be the second largest bank in the Gulf region with $147.5 billion worth of deposits after QNB, which has $194 billion deposits.

 

The Gulf’s Top 15 Banks by Deposits in Q1 2020 ($ bln)

 

Order

Bank

Country

Total Deposits

1

QNB

Qatar

194.0

2

NCB-Samba merged entity

Saudi Arabia

147.5

3

First Abu Dhabi Bank

UAE

135.4

4

Emirates NBD

UAE

127.3

5

Al Rajhi

Saudi Arabia

84.2

6

ADCB

UAE

71.6

7

DIB

UAE

54.5

8

NBK

Kuwait

51.7

9

 Riyad

Saudi Arabia

51.4

10

SABB

Saudi Arabia

50.2

11

KFH

Kuwait

44.0

12

BSF

Saudi Arabia

39.1

13

ANB

Saudi Arabia

36.3

14

QIB

Qatar

30.3

15

 Alinma

Saudi Arabia

27.7

         

In terms of total loans, the new entity will be the second largest bank in the Gulf region with $120.8 billion loans after QNB.

 

The Gulf’s Top 15 Banks by Loans in Q1 2020 ($ bln)

 

Order

Bank

Country

Total Loans

1

QNB

Qatar

194.5

2

NCB-Samba merged entity

Saudi Arabia

120.8

3

Emirates NBD

UAE

120.7

4

First Abu Dhabi Bank

UAE

104.1

5

Al Rajhi

Saudi Arabia

69.7

6

ADCB

UAE

67.2

7

NBK

Kuwait

53.8

8

DIB

UAE

49.1

9

 Riyad

Saudi Arabia

48.7

10

SABB

Saudi Arabia

42.1

11

BSF

Saudi Arabia

36.0

12

ANB

Saudi Arabia

32.0

13

QIB

Qatar

31.3

14

KFH

Kuwait

30.3

15

 Alinma

Saudi Arabia

26.1

         

Meanwhile, the new entity will top the GCC peers in terms of capital with nearly $12 billion. The list includes ten Saudi banks.

 

In December 2019, the board of directors of NCB and Riyad Bank agreed to back out of their merger negotiations, which started end of 2018.

 

According to Argaam calculations, the potential merger between NCB and Samba would be the second after the consolidation of SABB and Alawwal Bank.

 

The Public Investment Fund (PIF), the Public Pension Agency (PPA) and the General Organization for Social Insurance (GOSI) own various stakes in NCB and Samba.

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