SABB (Saudi bank)

HSBC Alawwal Bank Saudi Arabia
Saudi British Bank SJSC
Native name
البنك السعودي البريطاني
Public
Traded asTadawul1060
ISINSA0007879089 Edit this on Wikidata
IndustryFinance
FoundedJanuary 21, 1978; 42 years ago (1978-01-21)[1]
HeadquartersRiyadh, Saudi Arabia
Number of locations
81
Area served
Saudi Arabia
United Kingdom
Key people
ProductsFinancial services
Revenue$1.88 billion (2017[2])
Increase$1.05 billion (2017)
Total assets$0 (2017[2])
OwnersHSBC Holdings (51%)
Public shares (49%)
Number of employees
5,000+
Subsidiaries
  • HSBC Saudi Arabia
  • SABB Insurance Agency Limited
  • SABB Insurance Services Limited
  • SABB Securities Limited
  • SABB Takaful
RatingA1/P-1[3]
Websitewww.sabb.com

The Saudi British Bank (SABB) (Arabic: البنك السعودي البريطاني (ساب)‎) is a Riyadh-based Saudi joint stock company in which British banking firm HSBC Holdings PLC 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 foreign ownership of banks in Saudi Arabia, SABB was created in 1978 to manage HSBC branches and assets in the country.

SABB is one the five largest Saudi banks by deposits[5] and has over eighty branches across Saudi Arabia and one branch in London, England. 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.[6][7]

History

The British Bank of Iran and the Middle East, which became British Bank of the Middle East (BBME), opened branches in Jeddah and Al 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.

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.

As a result, HSBC incorporated in Saudi Arabia in 1978 and opened up to local ownership, renaming itself the Saudi British Bank. Ownership became 60% Saudi and 40% HSBC, and HSBC has a technical services agreement with the bank.[8][9]

HSBC Holdings of Britain held 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 51% stake.[10]

Services

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

2018 Merger with Alawwal Bank

On May 16, 2018, 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 will be represented by U.S. investment bank Goldman Sachs in the transaction.[11] Alawwal Bank will cease to exist as a legal entity and will be absorbed into SABB, creating Saudi Arabia's third largest bank with a market cap of $17.2 billion.[12]

SABB shareholders will own 73 percent of the new bank, which is expected to be chaired by Saudi businesswoman Lubna Al Olayan.[13][14] Final agreement on a 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.[6]

The merger of the two banks was completed on 16 June 2019.[15] Now the integration of the two banks will be completed in about 18 months.[16]

Credit rating

In August 2011, Fitch Ratings gave SABB'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”.[17]

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

See also

References

  1. ^ "About us - SABB Online Banking". Saudi British Bank.
  2. ^ a b "SAUDI BRITISH BANK Company Profile". Hoovers.
  3. ^ a b "Moody's affirms ratings of SABB, Alawwal Bank". Saudi Gazette. Jeddah. October 13, 2018. Retrieved 2018-11-14.
  4. ^ "Saudi British Bank (SABB)". relbanks.com. Retrieved 14 April 2012.
  5. ^ Saudi British Bank: Reinstating Coverage (PDF) (Report). Riyad Capital. September 16, 2015.
  6. ^ a b Platt, Gordon (June 1, 2018). "Saudi Arabia: First Major Bank Merger In Nearly Twenty Years". Global Finance.
  7. ^ "After Being Endorsed by Ceda: The 'Financial Sector Development Program' Holds a Forum to Introduce the Program and its Initiatives". SAMA. Riyadh. May 9, 2018.
  8. ^ Tschoegl, Adrian E. (2002). "Foreign banks in Saudi Arabia: a brief history" (PDF). Transnational Corporations. 2 (11): 123–154. Retrieved April 22, 2012.
  9. ^ Ramady, Mohamed A. (2010). The Saudi Arabian Economy: Policies, Achievements, and Challenges (2 ed.). New York: Springer Science & Business Media. ISBN 978-1-4419-5987-4.
  10. ^ HSBC Group becomes major shareholder of its Saudi subsidiary , zawya.com
  11. ^ Wendel, Samuel (October 4, 2018). "Saudi British Bank And Alawwal Bank Finalize Merger Agreement". Forbes Middle East.
  12. ^ "Saudi British Bank and Alawwal set to create Kingdom's third biggest bank". Arab News. 2018-10-04. Retrieved 2018-10-04.
  13. ^ Arnold, Tom (October 4, 2018). "Saudi British Bank secures binding deal for $5 bln acquisition of Alawwal". NASDAQ. Dubai.
  14. ^ "Lubna Al Olayan appointed as first woman Saudi bank head". BBC. 5 October 2018.
  15. ^ "Merge Page". www.alawwalbank.com. Retrieved 2020-07-17.
  16. ^ "Sabb completes merger with Alawwal Bank creating third-largest Saudi lender". The National. Retrieved 2020-07-17.
  17. ^ "Fitch affirms SABB rating". Arab News. Riyadh. August 11, 2011. Retrieved 25 August 2011. Long-Term Issuer Default Rating (IDR) at “A” with a stable outlook. The Viability Rating (VR) has also been affirmed at “a”.