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(Alliance News) - Royal Bank of Scotland Group on Monday said the completion of the merger between two Saudi Arabia based banks - Alawwal bank and Saudi British Bank - will lead to a "positive and material financial impact" on the UK listed lender.
Shares in RBS were trading 1.7% higher at 216.00 pence each in morning trade.
RBS, through its Dutch-domiciled investment bank NatWest Markets NV, was part of a consortium including Stichting Administratiekantoor Beheer Financiele Instellingen, or NLFI, and Spain's Banco Santander SA that held an aggregate 40% equity stake in Alawwal bank. The interest of RBS was equivalent to a 15.3% shareholding in Alawwal bank.
The bank said that as a result of the merger completion on Sunday, the NatWest Markets unit would recognise an income gain on the disposal of the Alawwal bank stake for shares in Saudi British Bank of GBP400 million and a reduction in risk weighted assets of GBP4.7 billion. RBS will also remove legacy liabilities of GBP300 million due to the merger.
In total, RBS will record a GBP700 million profit attributable to shareholders as a result of the Saudi bank combination. It also anticipates the merger to increase its CET1 core capital ratio at March 31 by 60 basis points, being 20 points attributable profit and 40 points to reduction in risk weighted assets.
"We are pleased that this merger has now concluded; it will help facilitate the future exit of our shareholding as we continue to focus on our key target markets. The release of capital will also have a positive and material financial impact for RBS," said RBS Chief Executive Officer Ross McEwan.
Saudi British Bank in October 2018 finalised an agreement to buy Alawwal Bank for USD5 billion, creating the kingdom's third-largest lender with USD71 billion in assets.
