National Commercial Bank, Saudi Arabia’s biggest lender, has ended talks in order to merge with Riyad Bank, a deal that would have created a lender with more than $200 billion in total assets.
The boards agreed to terminate talks, according to a statements to the Saudi stock market, without giving further details. Talks between the two banks began a year ago.
Lenders in the Gulf have been rapidly consolidating as they seek to stay competitive in an era of lower oil prices. Abu Dhabi completed the merger of three of its banks earlier this year to create the region’s fifth-biggest lender, while Saudi British Bank and Alawwal also combined.
The Public Investment Fund, Saudi Arabia’s sovereign wealth fund that holds stakes in some of the biggest lenders, owns 44% of National Commercial Bank and about 22% of Riyad Bank.
National Commercial Bank shares declined 2.4% this year, while those of Riyad Bank surged 23%. That compares with a gain of 4% for Saudi Arabia’s benchmark stock index.