Board of Directors of the General Authority for Competition Issues NOC for the Merger between SABB and Alawwal Bank

14/07/40


Board of Directors of the General Authority for Competition Issues NOC for the Merger between SABB and Alawwal Bank

The General Authority for Competition received on 17/5/1440H (23/1/2019) an economic concentration approval request submitted by the Saudi British Bank (SABB), which includes SABB's intention to complete the merger with Alawwal Bank. In accordance with the remit of the General Authority for Competition - under the Competition Law - to review economic concentration requests, assess their impact on competition, and decide thereon based on justifications and reasons for each case, and to achieve the highest levels of transparency for the public;

The General Authority for Competition would like to note that, upon reviewing the economic concentration request submitted by the Saudi British Bank (SABB), the Board of Directors of the General Authority for Competition issued its Resolution No. (309) dated 13/7/1440H (20/3/2019), including ‘’Non-objection to the merger between the Saudi British Bank (SABB) and Alawwal Bank.” The Board provided several reasons for its Resolution, including that:

- According to internationally accepted concentration criteria such as (market share and Herfindahl-Hirschman Index (HHI)) for deposits, loans, insurance, and financial transactions, the merged entity remains within levels consistent with the international standards of the comparator countries, including the G20 and GCC countries, and is unlikely to have anti-competitive effects domestically;

- The general trend of the comparator countries is to increase the levels of market concentration in the banking sector since the end of the 90s, and its pace increased significantly after the financial crisis in 2008 to ensure financial stability and appropriate solvency of banks in these countries;
 
- The regulation of the banking sector involves rigorous work to remove barriers to entry and allow domestic and foreign companies to engage in this business;
the economic reform of Vision 2030 supports the presence of banks with strong financial positions capable of providing various, innovative, and low-cost financial products; and

- The rapid technological development in the banking sector paved the way for increasing the distribution points of banking products and facilitated customer service and outreach, both temporally and geographically. The expectation is that new technologies will have a significant impact on reducing the cost of doing business and facilitating the entry of new firms, which will reflect on competition in this sector.