Credit Agricole to Build Its Own Saudi Bank After Stake Sale

Credit Agricole SA plans to build its own corporate and investment bank in Saudi Arabia after selling the final portion of its stake in Banque Saudi Fransi.

The French lender sold its remaining 4% holding for 1.45 billion riyal ($387 million) to two Saudi government-related institutional investors, Credit Agricole said in a statement on Monday, without identifying the entities. The shares were sold at 30 riyals each and will help shore up Credit Agricole’s capital.

The disposal ends Credit Agricole’s decades-long investment in one of the kingdom’s largest corporate banks. The French firm is plotting its own path in a region awash with mega-bond deals as well as stake sales by state-owned entities.

Credit Agricole CIB started the process to obtain a license to operate on Saudi’s capital markets and plans to further develop its presence and activities in the country, the unit’s chief executive officer, Jacques Ripoll, said in the statement.

Shares in Credit Agricole climbed as much as 5.8%, the most since June 5. The stock of Riyadh-based Saudi Fransi rose as much as 1.9% to 32.80 riyals, adding to gains of 0.6% on Sunday, when details of the transaction were first reported.

The latest transaction will add about 5 basis points to the risk-weighted assets of Credit Agricole, the lender said. Credit Agricole and JPMorgan Chase & Co. were joint financial advisers for the sale.

Credit Agricole has been gradually selling off its stake in Saudi Fransi over the past three years. It sold about 16% in 2017, about half of the total shares it held in the Saudi lender at the time, to billionaire Prince Alwaleed bin Talal. That was followed by a series of smaller deals with a consortium led by New York-based Ripplewood Holdings LLC.

Earlier this month, a Natwest Group Plc unit and Banco Santander SA sold some of their shares in Saudi British Bank to cut their stakes to about 3.3% and 2.4%. That comes after Royal Bank of Scotland Group Plc, which was renamed Natwest in July, tried for years to exit a legacy stake in held in Alawwal Bank, which was merged into Saudi British bank last year.

©2020 Bloomberg L.P.

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