Saudi NCB to take over Samba Financial for $15.6bn

KARACHI: The potential merger has implications for Samba Bank in Pakistan.

The National Commercial Bank (NCB), a large Saudi bank, offered to pay as much as $15.6 billion to acquire rival Samba Financial Group, according to a recent report by Bloomberg News.

The potential banking takeover has implications for Samba Bank in Pakistan, which is a majority owned subsidiary of Samba Financial Group. Samba Bank has around 40 branches across Pakistan.

According to a statement issued to the Saudi Stock Exchange, NCB offered to pay a premium of as much as 27.5 per cent to Samba's closing price on Wednesday. NCB will issue as many as 1.54 billion new shares to Samba shareholders, it said. Both banks have reportedly explored a merger.

The Samba Financial Group, formerly known as the Saudi American Bank, was established in 1980. Its name was changed to Samba permanently in 2003. The group has around 66 branches in Saudi Arabia, and also has branches in the UK and in Qatar.

The former Prime Minister of Pakistan, Shaukat Aziz, was the managing director of the bank in the 1990s.

Should a merger happen, the combined bank would have total assets of about $210 billion, making it the third largest in the region behind Qatar National Bank and First Abu Dhabi Bank.

Interestingly, the kingdom's sovereign wealth fund, also known as the Public Investment Fund, is the largest shareholder in both NCB and Samba, owning about 44 per cent of NCB and 23 per cent of Samba.

Several banks in the Middle East have recently consolidated, to improve competitiveness amidst an economic slowdown. Saudi Arabia's central bank also announced a $27 billion stimulus package in recent months to support banks.-PR

Copyright Business Recorder, 2020