How Do Al-Ahly & Samba Managed Accomplishing the Exceptionally Biggest Merger Task, ahead of time?

The management of the Saudi National Bank (SNB) have succeeded, in accomplishing the largest, biggest and fastest merger process, in the region, by merging with Al-Ahli and Samba banks, before the set -timetable, previously expected to take place, within 3-year-long period.

However, it managed to conclude it within 15-month only, that is as fast as 21-month ahead of the set period, i.e.  it was shortened to realize the binding agreement between the two merging banks.

The announcement of the merger was in October 2020, and the realization was 9-month later, following the legal launch of the new entity, in April 2021, where the SNB announced on January 6, 2022, the completion of the merger procedures between the National Commercial Bank and Samba Financial Group, to establish the largest and fastest merger process, in the history of the region.

The newborn banking entity established a financial power, with local and regional competitive capabilities, and consolidate the position of the Saudi banking sector, at the regional and global levels.

SNB management have succeeded, in saving as much as SR200 million, from the costs of the merger process, which were estimated previously at SR1.1 billion, to a maximum SR900 million, Managing Director and CEO of the Saudi National Bank Group (SNBg), Saeed Al-Ghamdi remarked.

The costs of the merger process have stood at SR900 million, as a one-time expense only, which is SR200 million less than what was previously announced.

SNB, has, similarly, succeeded in achieving estimated savings of more than SR500 million for the Year 2021, equivalent to SR800 million on an annual basis.

Estimated savings are expected to reach SR1.2 billion, annually, through 2023.

The new bank has completed all stages of the roadmap for the merger process, which led to the establishment of the largest banking entity, in the Kingdom, with assets exceeding SR900 billion, and a capital base of as much as 44.78 billion.

The merger included 5 main aspects, including transferring the accounts of individual clients and corporate clients, in addition to transferring clients of the treasury sector and clients of NCB Capital and Samba Capital, in addition to transferring other administrative sectors and merging branches from both banks.

The bank opened accounts for more than 1.4 million new accounts for individual customers, which constitute 100% of the total individual customers, and opened accounts for more than 11,000 customers who constitute 100% of customers from the small and medium-sized companies’ category, while the bank completed opening and activating accounts for 100% of the large companies category.

On the other hand, the Saudi National Bank has completed all procedures for transferring the treasury sector, the National Financial Sector, Samba Capital, and other administrative sectors and branches by 100%.

The success of the merger process and the completion of its stages, in such a smooth and distinctive manner and in record time, is a contribution to providing a historical banking experience, which deserves to be documented as a role model for achievement and outstanding performance.

The merger journey that resulted in the birth of the Saudi National Bank, the largest Saudi banking entity, had positive effects on various levels, regarding the bank’s financial performance and increasing profitability rates.

The timing of the merger process is a particularly important issue, as it coincides with the major transformation that the Kingdom is going through, whether at the economic, investment or development levels, and the transformation process that the Kingdom is experiencing calls for the presence of giant banking entities able to respond to the requirements, resulting from the rapid

changes.

SNB was largely able to maintain its profits’ growth rates during the current Year 2021, despite the expenses and costs, involved in the merger process, albeit below the expected estimates.

It has multiple capabilities, including acquiring a financing market share of about 27%, and a market share of up to 31% in terms of the assets’ volume.

The merger of Al-Ahly and Samba is among the most significant steps, if not the most crucial, in the history of the Saudi banking sector, as the merger took place, in a timely manner. Such a bold correction has taken place, because it coincides with the economic and development transformation, that the Kingdom is experiecing, as it was completed in record time and exceptional efforts.

The presence of a Saudi and national bank with such enormous capabilities, rich experience, and a network of cross-border relations, is widely considered to be able to play the leading role of a strong and reliable economic and financial partner for the Saudi national economy, as the value of the bank’s assets amounted to more than SR900 billion, as of last September 30, making it a banking power beyond the local boundaries to the regional level.

Among the leverages that can constitute a qualitative addition, is the bank’s orientation, in terms of focusing on what is known as digital banking, and creating an unprecedented experience that accelerates the steps of digital transformation, which is also a priority within the strategic agenda of the Kingdom’s Vision 2030.

And this requires a financial strength capable of investing, in the field of the financial technology, as well as a well-qualified human team, with vast capabilities and experience, which is available to the Saudi National Bank and makes levelled up to take the lead in this aspect.

And, in turn, that would naturally reflect on the quality of banking services, reputation of the Saudi banking experience and consolidate its leading position, in the region and the world, as well.

Following the the merger, the Saudi National Bank (SNB) became the largest banking entity, in the Kingdom, in terms of the volume of assets, with a market share of 31% of the total assets of the Saudi banking sector.

In addition to the largest capital, in the banking sector estimated at more than SR44.78 billion.

Similarly, it enable the bank to acquire a financing market share of approximately 27%, represented by a market share of 28% of individual financing and 24% of corporate financing, in the Kingdom.

All this, with the bank’s large customer base, strong presence and spread of its branch network and channels, and the efficiency of services and products, making it it a contender candidate for recording rising growth rates, during the current as well as the stage, to come.

The National Bank of Saudi Arabia benefited from the merger with Samba Bank, to a large extent, as the National Bank of Saudi Arabia was able to maintain its profit growth rates, during the Year 2021, despite the expenses and costs involved in the merger process, albeit below the expected estimates, but the profits came during the 3rd quarter.

It recorded a growth of 20%, as it rose at the end of September to SR3.8 billion, compared to SR3.2 billion, for the same period last year.

The merger process and the enormous potential available, represent an opportunity to create more growth opportunities and strong performance. The merger also reflected positively on the share price performance, which has risen by about 80%, since the non-binding framework agreement announced, on June 25, 2020.