Oil is not the only source of income for Saudi Arabia. As part of Vision 2030, a large-scale development program, the kingdom is planning to diversify its economy away from oil. One of the key items of this plan is a merger of two local largest banks.
The deal between two giants - National Commercial Bank and Samba Financial Group - is going to become the major one in 2020 in terms of their asset value. According to preliminary reports, Saudi Arabia's National Commercial Bank will purchase a 67.4 percent stake in its former rival for almost $15 billion. After the merger is completed, the financial institution will control $220 billion in assets and a market capitalization of $46 billion. As a result, this deal will create the third largest bank in the Gulf region. The asset reallocation is set to be finalized in the first half of next year. Interestingly, a year ago NCB abandoned plans to merge with Riyad Bank, another major player in the Saudi banking industry. However, a record economic slump amid the coronavirus pandemic and a steep fall in oil prices forced the company to reconsider its position on creating a combined entity.
Despite the intention to free the kingdom from dependence on oil exports, Saudi Arabia is still stepping up efforts to boost crude output capacity to 13 million barrels per day. Riyadh believes that after the country emerges from the acute phase of the crisis, this strategy will allow it to squeeze out competitors, including Russia.
