What's going on?

Saudi Arabia�s National Commercial Bank (NCB) and Samba Financial Group agreed to join forces late on Sunday, with their $15 billion deal the global banking industry�s biggest this year.

What does this mean?

NCB, Saudi�s largest lender, will buy smaller rival Samba. No cash is changing hands, however; instead, the Samba band will swap each share they owned previously for a 0.739 share of the new and improved NCB.


That’ll give them a stake in the Middle East�s third-biggest bank, with a market valuation of around $46 billion (all else equal) and more than $220 billion in assets. And that increased clout should please Saudi Arabia�s $380 billion sovereign wealth fund. As both banks� biggest investor � naturally � it�ll end up owning 37% of the combined company�s shares.

Why should I care?

For markets: What to expect when you�re expecting.

Samba�s shares rose slightly on Monday; they might�ve risen more but for the fact negotiations had been public for a while and investors had already bet on a deal. But NCB�s stock price rose too. That�s unusual for the company doing the buying � and could indicate increased investor confidence that the purchase will be beneficial in the long run.

The bigger picture: Banking on more bonding.

NCB�s swelling comes hot on the heels of last month�s Spanish bank merger, with discussions ongoing elsewhere about how best to escape the profit-punishing effects of low or even negative interest rates. News broke on Monday that the UK�s central bank has been asking how firms there would cope with negative rates � and investors may be tempted to identify which banks could potentially partake in any subsequent tie-ups. HSBC and Lloyds, for instance, are the UK�s most profitable banks � while RBS owner NatWest is the least.