Emirates NBD considers bid for Hollandi

23 May 2008
GCC’s largest bank looks to take 40 per cent stake in Saudi rival to expand its presence in the kingdom.

Emirates NBD, the largest bank in the GCC by assets, is considering making a bid for a 40 per cent stake in Saudi Hollandi, as it seeks to expand its presence in the Saudi banking market.

The stake was owned by ABN Amro, which was taken over by a consortium led by Royal Bank of Scotland (RBS) in 2007, and RBS has since put the Saudi bank stake up for sale.

The Saudi Arabian Monetary Agency (Sama), which must approve any sale, is known to favour a buyer from outside the region but no firm offers have yet emerged, leading to speculation that another Gulf bank could pick up the shares.

“It is an interesting asset and if it is up for sale, then we would be very interested in looking at it,” says Rick Pudner, chief executive officer of Emirates NBD.

“We have been watching this since ABN Amro signalled that it wanted to sell its stake in the bank.”

However, Pudner acknowledges the potential difficulty of completing the deal. “It does appear that Sama would like to have an international bank investing in Saudi Hollandi,” he says.

ABN first said in early 2005 that it was considering selling its stake in the Saudi bank. Following ABN’s acquisition in October 2007 for E72bn ($113bn), the fate of the stake has been uncertain. As well as considering a sale to another bank, Hollandi recently confirmed it is looking at floating the shares on the Saudi stock market (MEED 9:5:08).

Although Emirates NBD has just one branch in Riyadh, it has ambitions to expand elsewhere in the kingdom.

“It is not easy to play in the retail market with only one branch, so ideally we would like a geographic spread with a few more branches in the major cities,” says Pudner. “It is such an important market in the region that if we could expand there, it would offer some great opportunities.”

The Dubai-based bank has already been granted a licence by the Capital Market Authority in Saudi Arabia to establish an investment banking presence in the kingdom.

Expansion in Saudi Arabia is a key part of the bank’s inter-national strategy, which also includes upgrading a repres--entative office in Singapore to a full branch, opening a further representative office in Beijing and exploring opportunities in India.

Pudner says there is still significant potential for the bank to benefit from organic expansion of its existing operations.

He adds that he is focused on looking for acquisition oppor-tunities in the GCC and expansion in the rest of the Middle East and North Africa, as well as in India and Asia.

“The ambition is to be much more of a global bank than we are at the moment, and I think there is a good opportunity for a bank from the GCC to come out as a major international player, which has not quite happened yet,” he says.

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