Samba Financial Group (Samba) is considered a "more strategic fit" for National Commercial Bank (NCB), than Riyad Bank, Al Rajhi Capital said in a report.
"Samba could present good cost synergies," Al Rajhi added.
In the current scenario of the possibility of high non-performing assets (NPA), the combined entity will have among the lowest loan-to-deposit ratio (LDR) and highest investment book. Moreover, they have common owners in the form of Public Investment Fund (PIF) owning 44.3% of NCB and 22.9% of Samba.
"We believe investing through Samba would be a better route than staying invested through via NCB," Al Rajhi concluded.
On June 25, NCB signed a framework agreement with Samba to begin due diligence process, and negotiate definitive and binding terms of a potential merger, Argaam reported.
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