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Thu 17 Jan 2019 02:46 PM

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JPMorgan 'close' to being hired for Saudi bank merger

Sources say National Commercial Bank is close to hiring JPMorgan Chase & Co to advise on its merger with Riyad Bank

JPMorgan 'close' to being hired for Saudi bank merger
JPMorgan may work with Saudi Arabia’s largest bank on a merger proposal. (Chris Hondros/Getty Images)

National Commercial Bank is close to hiring JPMorgan Chase & Co to advise on its merger with Riyad Bank that would create the Gulf’s third-largest lender with $182 billion in assets, people familiar with the matter said.

JPMorgan may work with Saudi Arabia’s largest bank on the combination, the people said, declining to be identified because the decision hasn’t been made public.

The appointment is pending formal approval from the bank’s board and may change, they said. Riyad Bank is working with Goldman Sachs Group on the deal, the people said.

National Commercial Bank, Riyad Bank and Goldman Sachs couldn’t immediately be reached for comment, while JPMorgan declined to comment.

Lenders in the Persian Gulf have been rapidly consolidating as they seek to stay competitive in an era of lower oil prices. Abu Dhabi is working on a merger of three of its banks, potentially the emirate’s second in just over a year. About a dozen other regional lenders are also involved in takeover talks.

The Public Investment Fund, Saudi Arabia’s wealth fund that owns stakes in some of the biggest lenders, is weighing which banks could be merged as the kingdom explores potential combinations to boost its financial services industry, people familiar with the matter said in December.

The sovereign wealth fund owns a 44 percent stake in National Commercial Bank and about 22 percent of Riyad Bank. Other government-controlled funds hold stakes in both banks.
Goldman Sachs and JPMorgan also advised on the merger of SABB and Alawwal, the first bank combination in the country for about 20 years.

Shares in Riyad Bank have risen 15 percent since the merger talks were announced in December, while National Commercial Bank shares are up 10 percent.

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