Saudi Arabia's National Commercial Bank, the Gulf's largest lender by assets, said it planned to buy into more banks in the Middle East and North Africa after making its first foreign acquisition in Turkey.
National Commerical is paying $1.08 billion for a 60 percent stake in Turkiye Finans, according to a statement from the banks received in Istanbul. The Saudi bank's chief executive, Abdulkareem Abu Alnasr, told Reuters the acquisition would give National Commercial exposure to an economy that does not rely on energy exports.
National Commercial, like Turkiye Finans, complies with Islam's ban on lending on interest and is set to be eclipsed as the largest bank in the world's top exporting region by Emirates NBD, which Dubai is creating by combining two of its banks.
"This is actually a step in executing the expansion strategy we started 18 months ago when we set our goal to become the premier financial service institution in the region," Alnasr said in a telephone interview on July 17.
Other Gulf Arab banks are looking for acquisitions to gain the scale needed to meet demand for credit, spurred by economic growth and government investment of windfall revenue in infrastructure projects.
"We are looking predominantly at the Middle East/North Africa region, Turkey being part of that, in our vision," Abu Alnasr said. "Turkey's economy is not reliant on oil, so it's not correlated to our economy," he said, while banking reforms and a population of 74 million also drew National Commercial to the country.
A large market was one factor that would determine National Commercial's next target, Abu Alnasr said. National Commercial was among banks that expressed interest in National Bank for Development in Egypt, the most populous Arab country, the Cairo stock exchange said in April. "It's preferable for us to take majority stakes, but each deal has its characteristics," Alnasr said.