Saudi Awwal Bank Explained

Saudi Awwal Bank (SAB)
Type:Public
Founded:[1]
Location:Riyadh, Saudi Arabia
Native Name:البنك السعودي الأول
Native Name Lang:ar
Num Employees:5,000+
Revenue:$1.88 billion
Revenue Year:2017[2]
Assets:$90.79 billion
Assets Year:2021
Num Locations:81
Industry:Finance
Products:Financial services
Area Served:Saudi Arabia
United Kingdom
Profit:$1.05 billion (2017)
Rating:A1/P-1[3]

Saudi Awwal Bank (SAB; Arabic: البنك السعودي الأول) is a Riyadh-based Saudi joint stock company in which global banking group HSBC owns a minority stake.[4] The bank traces its origins to the British Bank of the Middle East which was acquired by HSBC in 1959. In response to restrictions on forei

gn ownership of banks in Saudi Arabia, Saudi Arab British Bank (SABB) was created in 1978 to manage HSBC branches and assets in the country.

In May 2018, prompted by recent changes to Vision 2030 economic reforms, SABB announced its intention to acquire Alawwal Bank in the Saudi banking sector's first merger in twenty years.[5] [6] On June 16, 2019, the official legal merger of Saudi British Bank and Alawwal Bank was completed, making the two banks one legal entity.[7] The bank adopted its current name following the completion of the merger.[8]

SAB is one of the five largest Saudi banks by deposits,[9] and has over eighty branches across Saudi Arabia and one branch in London, England.

History

British Bank of Iran and the Middle East (1950)

The British Bank of Iran and the Middle East, which became British Bank of the Middle East (BBME), opened branches in Jeddah and Khobar in 1950. The Jeddah branch in particular depended for its profits on the Hajj, the Muslim pilgrimage to Makkah (Mecca). Hongkong and Shanghai Banking Corporation (HSBC) acquired BBME in 1959.

Saudi Arab British Bank (1978)

In 1976 the central bank enacted its sweeping policy of banking sector Saudization to address foreign banks' domination of the sector and its impact on the Saudi economy. Consequently, it directed all foreign bank branches to incorporate in Saudi Arabia (i.e., become Saudi companies with Saudi capital) and limited their parent companies to ownership of forty percent of these new entities. [10]

As a result, HSBC was incorporated in Saudi Arabia in 1978 and opened up to local ownership, renaming itself the Saudi Arab British Bank (SABB). Ownership became 60% Saudi and 40% HSBC, and HSBC has a technical services agreement with the bank.[11] [12]

HSBC Holdings of Britain held a 49% stake in the joint venture with SABB holding 51% until October 2019 when HSBC Group acquired shares from SABB to become the major shareholder with a 51% stake. [13]

Merger with Alawwal Bank (2019)

On May 16, 2018, SAB, formerly known as SABB, and Alawwal Bank (formerly Saudi Hollandi Bank) entered into a non-binding agreement on a deal for SABB to acquire Alawwal. The agreement concluded nearly one year of negotiations, and SABB was represented by U.S. investment bank Goldman Sachs in the transaction.[14] Alawwal Bank, as per agreement,ceased to exist as a legal entity and was absorbed into SABB, creating Saudi Arabia's third largest bank with a market cap of $17.2 billion.[15]

SABB shareholders owned 73 percent of the new bank, which is chaired by Saudi businesswoman Lubna Al Olayan.[16] [17] The final agreement on the merger deal was announced one week after the Saudi government launched the Financial Sector Development Program, an executive program aimed at overhauling the Saudi financial sector to create an effective capital market capable of supporting the goals of the Vision 2030 economic reform plans.

The merger of the two banks was completed on 16 June 2019.[18] The integration of the two banks was planned to be completed in about 18 months.[19]

The integration was completed in 18 months,[20] which resulted in the retention of the brand name "Saudi British Bank".[21] [22]

On 14 March 2021, Alawwal & SABB fully integrated in historic bank merger.[23] The combined bank uses HSBC's familiar hexagon logo and typeface in its branding.

Services

SAB offers services in investment banking, commercial banking, private banking and Islamic banking. SAB Islamic Financial Solutions (Arabic: الحلول المالية الإسلامية), which are part of SAB services, are regulated by the Saudi Arabian Monetary Agency and a Sharia Supervisory Committee. This ensures that SAB Islamic Financial Solutions conforms to strict adherence to the principles of Sharia.[24]

Credit rating

In August 2011, Fitch Ratings gave SAB's long-term issuer default rating (IDR) at “A” with a stable outlook as well as The Viability Rating (VR) has also been affirmed at “A”.[25]

In October 2018, in anticipation of its pending merger with Alawwal Bank, Moody’s reaffirmed local and foreign currency deposit ratings of SAB at A1/P-1 and Alawwal Bank at A3/P-2, respectively.[3]

See also

External links

Notes and References

  1. Web site: About us - SABB Online Banking. Saudi British Bank.
  2. Web site: SAUDI BRITISH BANK Company Profile. Hoovers.
  3. News: . Jeddah. Moody's affirms ratings of SABB, Alawwal Bank. October 13, 2018. Saudi Gazette. 2018-11-14.
  4. Web site: Saudi British Bank (SABB) . relbanks.com . 14 April 2012.
  5. Web site: Saudi Arabia: First Major Bank Merger In Nearly Twenty Years. June 1, 2018. Platt. Gordon. Global Finance.
  6. News: After Being Endorsed by Ceda: The 'Financial Sector Development Program' Holds a Forum to Introduce the Program and its Initiatives. SAMA. May 9, 2018. Riyadh.
  7. Web site: Muzoriwa . Kudakwashe . 2023-04-05 . Saudi Arabia's SABB rebrands after $5bn merger with Alawwal . 2023-06-04 . en-US.
  8. Web site: Arab News . After historic merger, SABB is now SAB — Alawwal, will operate as Saudi Awwal Bank . .
  9. Saudi British Bank: Reinstating Coverage . Riyad Capital . www.riyadcapital.com. September 16, 2015.
  10. Jones . Calvert W. . 2019-01-01 . Social Engineering in Rentier States . POMEPS Studies Series.
  11. Tschoegl. Adrian E.. Foreign banks in Saudi Arabia: a brief history. Transnational Corporations. 2002. 2. 11. 123–154. April 22, 2012.
  12. Book: Ramady, Mohamed A.. The Saudi Arabian Economy: Policies, Achievements, and Challenges. 2. Springer Science & Business Media. New York. 2010. 978-1-4419-5987-4.
  13. Web site: HSBC Group becomes major shareholder of its Saudi subsidiary. www.zawya.com.
  14. Web site: Saudi British Bank And Alawwal Bank Finalize Merger Agreement. October 4, 2018. Samuel. Wendel. Forbes Middle East. November 19, 2018. November 20, 2018. https://web.archive.org/web/20181120015227/https://archives.forbesmiddleeast.com/en/saudi-british-bank-and-alawwal-bank-finalize-merger-agreement/. dead.
  15. News: Saudi British Bank and Alawwal set to create Kingdom's third biggest bank. 2018-10-04. Arab News. 2018-10-04. en.
  16. News: Saudi British Bank secures binding deal for $5 bln acquisition of Alawwal. NASDAQ. Arnold. Tom. Dubai. October 4, 2018.
  17. Web site: Lubna Al Olayan appointed as first woman Saudi bank head. BBC. 5 October 2018.
  18. Web site: Merge Page. 2020-07-17. www.alawwalbank.com. en. 2021-02-11. https://web.archive.org/web/20210211194607/https://www.alawwalbank.com/en/merger/merge-page. dead.
  19. Web site: Sabb completes merger with Alawwal Bank creating third-largest Saudi lender. 2020-07-17. The National. 16 June 2019 . en.
  20. Web site: SABB, Alawwal Complete Merger Creating Third-Largest Saudi Bank. 17 July 2020. Asharq Al Awsat.
  21. News: Sabb completes merger with Alawwal Bank creating third-largest Saudi lender. 17 July 2020. The National.
  22. Web site: 2023-04-08 . After historic merger, SABB is now SAB — Alawwal . 2023-10-19 . Arab News . en.
  23. News: 2021-03-14. Alawwal & SABB fully integrate in historic bank merger. 2021-03-30. Arab News. en.
  24. Web site: Review . G. T. . Thompson . Felix . 2021-12-01 . SABB rolls out new sharia-compliant SCF product . 2023-06-04 . Global Trade Review (GTR) . en.
  25. Web site: August 11, 2011. Riyadh. Fitch affirms SABB rating. Arab News. Long-Term Issuer Default Rating (IDR) at “A” with a stable outlook. The Viability Rating (VR) has also been affirmed at “a”.. 25 August 2011. 26 August 2011. https://web.archive.org/web/20110826220758/http://arabnews.com/economy/corporatenews/article486790.ece. dead.