Saudi Arabia's National Commercial Bank is in initial merger discussions with Riyad Bank, though the former said the discussions may not necessarily lead to a definitive agreement.

The biggest lender of Saudi Arabia, National Commercial Bank, said central bank Saudi Arabian Monetary Authority is aware of the move, and a transaction is unlikely to result in staff layoffs.

In case of a deal, which shall be subject to regulatory and shareholder approvals, the combined bank would hold $182 billion in assets, becoming the third-largest bank in the Gulf, Bloomberg News reported.

Saudi wealth fund Public Investment Fund, which owns 22% of Riyad Bank and nearly 44% of National Commercial Bank, is reportedly exploring which banks could be merged to boost the financial services industry.

Riyad Bank's share price jumped 8.19% on Dec. 25 at market close, and National Commercial Bank's rose 1.49%.