The boards of directors of the two largest banks in Saudi Arabia, in terms of capital, have announced their final decision to formally end the year's discussions on their merging.
This announcement ends the idea of forming the largest commercial bank in Saudi Arabia and the region.
Following the end of transactions on Monday, the Saudi Stock Exchange (Tadawul)announced Saudi Arabia’s biggest lender by assets, National Commercial Bank (NCB), and Riyad Bank’s decision to end preliminary merger talks and not to continue with the merger study.
The capital of each of the two banks amounts to SAR30 billion (eight billion dollars), and they are considered the most expanding banks, in terms of the number of branches all over the country, according to statistics carried out in October.
The NCB comes second after Al-Rajhi Bank with 421 branches in various Saudi regions, and Riyadh Bank comes third with 312 branches.
The NCB also has 3,724 automated teller machines (ATMs) in the country’s vast regions, following the leading Al Rajhi Bank, while Riyad Bank comes third, with 2,559 ATMs.
Although the two giant banks did not provide any reason for their decision, yet, suggestions tell they have decided to proceed with their strategic vision project, separately.
They launched preliminary merger talks in December 2018.
The two banks provide high financial performance and outcomes. They also score many achievements in the level of products provided and acquire a significant share in the country’s bank financing market.
NCB said it is committed to becoming the region’s leading financial services group by “implementing its sustainable growth strategy.”
Riyad Bank, for its part, said it will continue to develop its products, services, and technologies that “serve the interests of its customers, shareholders, and employees.”
According to the expert in the banking industry, Dr. Salah al-Shalhoub, the failure to reach an agreement may be due to the two banks’ inability to agree on the strategic roles targeted.
He pointed out that the Kingdom is a huge market, especially its finance sector, since there is a little number of existing banks, especially in terms of individual services versus the real market need.
In a statement on Monday, Shalhoub encouraged each bank to go for its preferred options, stressing the importance of raising its capital without the need to merge.