National Commercial Bank, Saudi Arabia's largest lender by assets, is in initial merger discussions with Riyad Bank.
If a deal goes through, the combined entity would have about 685.05 billion riyals in assets, according to S&P Global Market Intelligence data. It will overtake Dubai-based Emirates NBD Bank PJSC as the third-largest lender in the Gulf region by that measure.
The potential deal would mark the biggest bank tie-up in the region since United Arab Emirates-based First Gulf Bank and National Bank of Abu Dhabi agreed to merge in 2016, creating First Abu Dhabi Bank PJSC. It also comes less than a year after Saudi British Bank and Alawwal Bank agreed to merge.
Other bank mergers in neighboring Gulf countries are also underway. Oman's Bank Dhofar SAOG and National Bank of Oman SAOG are in talks to merge, and so are Oman Arab Bank SAOC and Alizz Islamic Bank SAOG. A potential tie-up between Kuwait Finance House KSCP and Bahrain's Ahli United Bank BSC has also been mooted, while Qatar's Barwa Bank QSC and International Bank of Qatar QSC have signed a final agreement to merge after talks of a three-way tie-up with Masraf Al Rayan QPSC fell through. In the UAE, three lenders are also in talks to combine, led by Abu Dhabi Commercial Bank PJSC.
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As of Jan. 4, US$1 was equivalent to 3.75 Saudi Arabian riyals.