The two lenders started discussions on a potential merger in April 2017.
Alawwal bank has announced that it has entered into a binding merger agreement with Saudi British Bank (SABB).
In a statement, Alawwal bank stated that following the terms of the agreement, SABB and Alawwal bank will merge and all of the assets and liabilities of Alawwal bank will be transferred to SABB.
On completion of the merger, SABB will continue to exist and Alawwal bank will cease to exist as a legal entity and its shares will be cancelled and new shares in SABB will be issued to shareholders of Alawwal bank.
If the merger is completed, Alawwal bank shareholders will receive 0.49 new SABB shares for each Alawwal bank share ‘the exchange ratio’.
Additionally, the new shares will be issued by way of a capital increase, which will increase the SABB paid-up capital by 37 per cent from SAR 15 billion to around SAR 21 billion and the number of its issued shares will increase from 1,5 billion to 2,1 billion.
The Board of directors of the involved lenders consider the terms of the merger to be fair and reasonable.
Alawwal bank and SABB merger will create the Kingdom’s third-largest bank, a top-tier retail and corporate bank with SAR 271 billion in assets.
There will be no immediate change for customers as a result of today’s announcement, both banks will remain independent and continue to operate a business as usual service until the merger has completed, added Tadawul.