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Saudi Arabia’s NCB in Preliminary Merger Talks with Riyad Bank

Saudi Arabia’s National Commercial Bank (NCB) and Riyad Bank have begun preliminary discussions to study the possibility of a merger. (AFP)
Saudi Arabia’s National Commercial Bank (NCB) and Riyad Bank have begun preliminary discussions to study the possibility of a merger. (AFP)
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Saudi Arabia’s NCB in Preliminary Merger Talks with Riyad Bank

Saudi Arabia’s National Commercial Bank (NCB) and Riyad Bank have begun preliminary discussions to study the possibility of a merger. (AFP)
Saudi Arabia’s National Commercial Bank (NCB) and Riyad Bank have begun preliminary discussions to study the possibility of a merger. (AFP)

Saudi Arabia’s National Commercial Bank (NCB) and Riyad Bank have begun preliminary discussions to study the possibility of a merger, an important step in the financial sector in the country.

The NCB said in a press statement on Saudi Tadawul website Monday that entering into these discussions does not necessarily mean that the merger will take place between the two parties.

It further added that any agreement would be subject to regulatory and shareholder approvals of both banks, and there would be no forced job losses.

The National Bank pointed out that coordination with the Saudi Arabian Monetary Agency (SAMA) regarding the merger requirements was initiated before the start of these talks. However, it explained in the press statement that "formal approvals are still required before the merger is completed."

NCB indicated that any future developments will be announced in a timely manner, confirming that shareholders will be informed of any upcoming developments in this regard.

Riyad Bank also announced its board of directors’ approval to start preliminary discussions with NCB regarding the merger of the two banks.

If completed, the merger will lead to a very strong capital structure with each bank’s capital reaching about $8 billion.

The announcement of merger discussions follows the signing of a binding merger agreement in October by Saudi British Bank (SABB) and al-Awwal Banks.

The Financial Sector Development Program 2020, recently announced by Saudi Arabia, is a new global model for exploring development and overcoming challenges, thus creating a very strong financial sector in all its details in line with Vision 2030.

The Program, is one of the 12 executive programs launched by the Council of Economic and Development Affairs (CEDA) to achieve the objectives of Vision 2030. It seeks to develop the financial sector as a diversified and effective financial services sector to support the development of the national economy by stimulating savings, finance and investment.

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ECB's Lagarde Renews Integration Call as Trade War Looms

FILE PHOTO: European Central Bank President Christine Lagarde and Governor of the Bank of Finland Olli Rehn arrive at the non-monetary policy meeting of the ECB's Governing Council in Inari, Finnish Lapland, Finland February 22, 2023. Lehtikuva/Tarmo Lehtosalo via REUTERS//File Photo
FILE PHOTO: European Central Bank President Christine Lagarde and Governor of the Bank of Finland Olli Rehn arrive at the non-monetary policy meeting of the ECB's Governing Council in Inari, Finnish Lapland, Finland February 22, 2023. Lehtikuva/Tarmo Lehtosalo via REUTERS//File Photo
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ECB's Lagarde Renews Integration Call as Trade War Looms

FILE PHOTO: European Central Bank President Christine Lagarde and Governor of the Bank of Finland Olli Rehn arrive at the non-monetary policy meeting of the ECB's Governing Council in Inari, Finnish Lapland, Finland February 22, 2023. Lehtikuva/Tarmo Lehtosalo via REUTERS//File Photo
FILE PHOTO: European Central Bank President Christine Lagarde and Governor of the Bank of Finland Olli Rehn arrive at the non-monetary policy meeting of the ECB's Governing Council in Inari, Finnish Lapland, Finland February 22, 2023. Lehtikuva/Tarmo Lehtosalo via REUTERS//File Photo

European Central Bank President Christine Lagarde renewed her call for economic integration across Europe on Friday, arguing that intensifying global trade tensions and a growing technology gap with the United States create fresh urgency for action.
US President-elect Donald Trump has promised to impose tariffs on most if not all imports and said Europe would pay a heavy price for having run a large trade surplus with the US for decades.
"The geopolitical environment has also become less favorable, with growing threats to free trade from all corners of the world," Lagarde said in a speech, without directly referring to Trump.
"The urgency to integrate our capital markets has risen."
While Europe has made some progress, EU members tend to water down most proposals to protect vested national interests to the detriment of the bloc as a whole, Reuters quoted Lagarde as saying.
But this is taking hundreds of billions if not trillions of euros out of the economy as households are holding 11.5 trillion euros in cash and deposits, and much of this is not making its way to the firms that need the funding.
"If EU households were to align their deposit-to-financial assets ratio with that of US households, a stock of up to 8 trillion euros could be redirected into long-term, market-based investments – or a flow of around 350 billion euros annually," Lagarde said.
When the cash actually enters the capital market, it often stays within national borders or leaves for the US in hope of better returns, Lagarde added.
Europe therefore needs to reduce the cost of investing in capital markets and must make the regulatory regime easier for cash to flow to places where it is needed the most.
A solution might be to create an EU-wide regulatory regime on top of the 27 national rules and certain issuers could then opt into this framework.
"To bypass the cumbersome process of regulatory harmonization, we could envisage a 28th regime for issuers of securities," Lagarde said. "They would benefit from a unified corporate and securities law, facilitating cross-border placement, holding and settlement."
Still, that would not solve the problem that few innovative companies set up shop in Europe, partly due to the lack of funding. So Europe must make it easier for investment to flow into venture capital and for banks to fund startups, she said.