IslamicFinance.de

The proposed merger of Saudi British Bank (SABB) and Alawwal Bank has been delayed but not derailed. The two banks announced in April that they had agreed to start talks, but progress has since faltered because of the complexity of the deal. Progress on the SABB-Alawwal merger has taken longer than expected because the regulatory environment for bank acquisitions in Saudi Arabia is relatively untested. Meanwhile, dozens of princes, high officials and senior businessmen were detained in November in a corruption crackdown. Among those was SABB vice chairman Khalid Bin Abdullah al-Mulhem. Almost all banks in Saudi Arabia were affected by the crackdown when authorities ordered the freezing of more than 2,000 accounts across the sector. A merged Alawwal and SABB would rank as the third-largest bank in Saudi Arabia with assets of $77.6bn, behind National Commercial Bank and Al Rajhi Bank.

GCC's banking sector is expected to see a new round of mergers and acquisitions (M&A) in the wake of the latest such move initiated by Kuwait Finance House and Ahli United Bank of Bahrain. According to U Capital, at least five M&A deals are in various stages of discussion. The new round of M&A follows the merger between National Bank of Abu Dhabi (NBAD) and First Gulf Bank (FGB) in the UAE, resulting in creation of the regions second biggest bank. Combined assets of four top conventional banks in the region stand at $621 billion whereas the assets of entire Islamic banks in GCC stand at $563 billion as of second quarter 2017. According to banking sources, Masraf Al Rayan, International Bank of Qatar and Barwa Bank are in the due diligence phase. The three-way merger is expected to create the largest Islamic bank in Qatar. Saudi British Bank and Alawwal Bank are also said to be discussing a potential merger that would create the third-largest bank in Saudi Arabia.