Middle East Banks Pair Up to Weather Oil’s Plunge and Virus

The global pandemic and an oil price rout are prompting a new wave of consolidation talk among banks in the Middle East. In recent weeks, two potential tie-ups in Saudi Arabia and Qatar have been announced, adding momentum to an already unprecedented merger and acquisition spree. With about $440 billion of deals on the table, here’s what’s in the works:

National Commercial Bank and Samba

  • Saudi Arabia’s largest lender by assets last month said it plans to pay as much as $15.6 billion to acquire rival Samba Financial Group in what could be the world’s biggest banking takeover this year. The potential deal, which would create the region’s third-largest lender, comes about six months after NCB abandoned plans to merge with Riyad Bank
  • Combined entity: About $210 billion
  • Story: Saudi Bank NCB Plans $15.6 Billion Takeover of Rival Samba

Masraf Al Rayan and Al Khalij Commercial Bank

  • Masraf Al Rayan and Al Khalij Commercial Bank entered initial negotiations in June to create an Islamic entity. Barwa Bank and International Bank of Qatar merged in 2018 after a proposed three-way merger with Masraf Al Rayan was abandoned
  • Combined entity: $45 billion
  • Story: Qatar Lenders Start Merger Talks as Mideast Banks Consolidate
Middle East Banks Pair Up to Weather Oil’s Plunge and Virus

Oman Arab Bank and Alizz Islamic Bank

  • Oman Arab Bank agreed in June to acquire local competitor Alizz Islamic as one of the country’s largest investment funds, Omnivest, sold its 12% stake
  • The agreement marks the culmination of talks that started in 2018 and the combined entity will become a wholly-owned unit of Oman Arab
  • Combined entity: $8.4 billion
  • Story: Oman Arab Bank Agrees to Alizz Islamic Takeover as Fund Sells

Dubai Islamic Bank and Noor Bank

  • The United Arab Emirates’ biggest Islamic lender completed a deal in January to buy smaller rival Noor Bank in an all-share deal. The bank has since joined competitors in courting more international investors by raising its foreign ownership cap to 40%
  • Combined entity: $75.3 billion
  • Story: Dubai Islamic Bank Agrees to Buy Noor Bank in All-Share Deal

Some deals have also fallen victim to the pandemic with a Kuwaiti-Bahrain tie up on hold and a potential acquisition in Egypt halted.

Kuwait Finance House and Ahli United Bank of Bahrain

  • Kuwait Finance House has postponed its acquisition of Ahli United Bank of Bahrain until December. The transaction, which would have been one of the Middle East’s rare cross-border bank mergers, has been put under review because of the coronavirus. Kuwait’s central bank asked KFH to “conduct a comprehensive reassessment” of its proposed acquisition.
  • Combined entity: $104 billion
  • Story: Kuwait Central Bank Asks for Reassessment of KFH Purchase of AUB

First Abu Dhabi Bank and Bank Audi

  • Lebanon’s Bank Audi in May mutually agreed to stop the process to sell its Egyptian unit to the Abu Dhabi lender due to the “unprecedented circumstances and uncertain outlook relating to the Covid-19 pandemic”
  • Story: Bank Audi Says Agreed With FAB to Stop Sale of Bank Audi-Egypt

©2020 Bloomberg L.P.

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