Saudi ANB drops acquisition plans

Arab National Bank (ANB), Saudi Arabia's sixth largest lender by market value, said on Tuesday it has abandoned plans to expand through regional acquisitions to focus on growth in the domestic market.

"We are not thinking about making bids to buy any bank," Chairman Abdullatif al-Jaber told Reuters in an interview.
ANB's Chief Executive Robert Eid said in March the bank was looking for acquisition opportunities after it lost the race to buy an 80 % stake in Egypt's Bank of Alexandria. Italy's Sanpaolo bank paid $1.6 billion for the stake in the first big Egyptian state bank to be privatised.

"Our bid for the Egyptian bank was with our partners in Arab Bank... We (ANB) have turned away from this idea. If a second opportunity presents itself we will not consider it. We prefer to focus on our country," Jaber said.

ANB is 40 % owned by Jordan's Arab Bank, which has since said it plans to raise its own capital to finance acquisitions.

Arab National expects to benefit from public and private spending in major infrastructure and housing projects on the back of the economic boom fuelled by high oil receipts, he said.

"We have large projects in our country and there are huge business opportunities, people (foreign banks) love to come and work here so why should go elsewhere".

The potential in the Saudi market is strong enough to help the bank post a growth in net profit at the end of 2007, Jaber said. "For 2007, we should continue on the same pace" of growth in first-quarter profit, he said.

ANB's net profit in the first quarter rose 3.5 %, making it the only lender of ten listed Saudi banks to post a growth in net profit during that period.

"Saudi banks in general will not show in 2007 the same profit growth of 2006. We expect a good growth in profits in 2007 but not of the same magnitude of 2006," he said.

He declined to be more specific. ANB's net profit rose 37 % in 2006.

Saudi bank's profit growth slowed considerably after a stock market crash last year erased more than 50 % of the market capitalisation of the largest Arab bourse.

In Saudi Arabia, around 40 % of banks' income in 2005 came from non-interest operations, such as brokerage activity, asset management and fees from share offerings, investment bank EFG-Hermes has said.

"There are numerous projects funded by oil revenues and the private sector... So banks have a lot of areas to benefit from to help them compensate declines in other sources of revenues," Jaber said.

The bank will open 30 new branches this year, taking its network in the kingdom to 150, Jaber said. It will also open 35 centres to process remittances for foreign workers.

The bank has set up a mortgage firm with real-estate developer Dar al-Arkan and the International Finance Corporation, the commercial lending arm of the World Bank.

ANB also set up a heavy equipment leasing firm this year with a capital of 1.5 billion riyals.

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