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Largest Saudi Bank Merger to Increase Internal, External Branches

FILE PHOTO: A Saudi man walks outside the Saudi National Commercial Bank (NCB), after a coronavirus outbreak, in Riyadh, Saudi Arabia, March 18, 2020. REUTERS/Ahmed Yosri/File Photo
FILE PHOTO: A Saudi man walks outside the Saudi National Commercial Bank (NCB), after a coronavirus outbreak, in Riyadh, Saudi Arabia, March 18, 2020. REUTERS/Ahmed Yosri/File Photo
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Largest Saudi Bank Merger to Increase Internal, External Branches

FILE PHOTO: A Saudi man walks outside the Saudi National Commercial Bank (NCB), after a coronavirus outbreak, in Riyadh, Saudi Arabia, March 18, 2020. REUTERS/Ahmed Yosri/File Photo
FILE PHOTO: A Saudi man walks outside the Saudi National Commercial Bank (NCB), after a coronavirus outbreak, in Riyadh, Saudi Arabia, March 18, 2020. REUTERS/Ahmed Yosri/File Photo

With the imminent announcement of the start of the operations of Saudi Samba and the National Commercial Bank (NCB) next month, Samba’s Chairman Eng. Ammar Alkhudairy said that the merger would enhance the ability of the new bank to produce and distribute new products and keep pace with the Saudi economic growth within Vision 2030.

During a meeting on Tuesday organized by the Financial Knowledge and Communication Center (Mutamim), AlKhudairy stressed that no employee would be dismissed as a result of the merger, noting that the market value of the two banks would rise by 40 to 50 percent as of the announcement.

Member of the Board of Directors of the Saudi Financial Society, Talaat Hafiz, underlined the importance of the merger in improving the quality of banking services and expanding the product base, as well as creating a great scope for innovation and strengthening the ability to overcome financial challenges facing giant and large entities.

Hafiz noted that the merger came in line with the requirements of the Kingdom’s Vision 2030, which includes 13 programs and mega projects in terms of quality and funding needed for NEOM, The Line, The Red Sea, Qiddiya and others.

Such large projects require large sums, which cannot be provided by medium or small financial entities, which means that this merger will have an impact in supporting mega projects in energy, entertainment, tourism and sustainable development, he emphasized.

In comments to Asharq Al-Awsat, Hafiz said the new entity would confirm the success of the attempts to create an added value for the Kingdom’s economy and development, in light of global economic and financial challenges.

With regard to the impact of this merger on attracting foreign direct and indirect investments, he said: “Attracting investments certainly requires a large market and sources of financing; thus, an entity such as the new merged bank will help support local and foreign investors, and the interest will be reciprocal in view of the size of the combined assets, which are estimated at 837 billion riyals (USD 223.2 billion).”

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Turkish Central Bank Surprises with Rate Hike to 46% after Market Turmoil

A logo of Türkiye's Central Bank (TCMB) is pictured at the entrance of the bank's headquarters in Ankara, Türkiye April 19, 2015. REUTERS/Umit Bektas/File Photo
A logo of Türkiye's Central Bank (TCMB) is pictured at the entrance of the bank's headquarters in Ankara, Türkiye April 19, 2015. REUTERS/Umit Bektas/File Photo
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Turkish Central Bank Surprises with Rate Hike to 46% after Market Turmoil

A logo of Türkiye's Central Bank (TCMB) is pictured at the entrance of the bank's headquarters in Ankara, Türkiye April 19, 2015. REUTERS/Umit Bektas/File Photo
A logo of Türkiye's Central Bank (TCMB) is pictured at the entrance of the bank's headquarters in Ankara, Türkiye April 19, 2015. REUTERS/Umit Bektas/File Photo

The Turkish central bank hiked its key interest rate by 350 basis points to 46% on Thursday, in a surprise move that reversed an easing cycle and slightly boosted the lira, following market volatility in the wake of last month's arrest of Istanbul's mayor.

The bank also lifted its overnight lending rate again, to 49% from 46%, after having already raised it last month in an unscheduled decision following the arrest.

In addition, the overnight borrowing rate was lifted to 44.5% from 41%, underlining the hawkish reversal in monetary policy.

"Monthly core goods inflation is expected to rise slightly in April due to recent developments in financial markets," the central bank's policy committee said in releasing the decision, Reuters reported

Leading indicators suggest domestic demand is above projections, "suggesting a lower disinflationary impact," it said.

"Inflation expectations and pricing behaviour continue to pose risks to the disinflation process," the bank said, adding it would tighten further "in case a significant and persistent deterioration in inflation is foreseen."

The central bank had begun easing in December, when the rate was 50%, after an aggressive tightening effort since mid-2023 to bring down years of soaring prices and a series of currency crashes.

In a Reuters poll, ten of 13 respondents forecast the bank would maintain its one-week repo rate while three predicted a hike of up to 350 basis points. Most respondents expected the overnight lending rate would be held at 46%.

The lira strengthened slightly right after the decision and traded at 38.10 to the US dollar, while the benchmark stock index BIST 100 and banking index pared back some of its gains during the day.

Last month, the currency briefly hit a record low of 42 and stocks and bonds plunged after the detention of Istanbul Mayor Ekrem Imamoglu, pushing economic authorities to take several measures to ease the market fallout.

Economists expect the roughly 3% weakening of the lira to lift April and May inflation readings. Annual inflation had slowed to 38.1% in March, and was 2.46% month-on-month, lower than forecast.

Imamoglu - President Erdogan's chief rival - is now jailed pending trial in legal moves that sparked the biggest protests in more than a decade and broad criticism of a politicised judiciary and eroding rule of law, claims the government denies.

The lira steadied near 38 to the dollar and Turkish assets recovered somewhat after the central bank sold some $50 billion since Imamoglu's arrest to stabilise the situation, and it bought some 120 billion lira ($3.15 billion) worth of bonds.

The central bank also raised its overnight lending rate by two percentage points to 46% and paused funding through one-week repo auctions, effectively tightening funding conditions by 400 basis points.

On Thursday the bank said it will closely monitor liquidity conditions and added: "In response to the recent developments in financial markets, additional measures to support the monetary transmission mechanism were quickly put in place."

The rate decision came amid global market turmoil caused by what has become an all-out trade war between the United States and China, with both sides ratcheting up their import tariffs.