Saudi Oval Bank (SAB; Arabic ：البنك السعودي الأول） is a Saudi joint-stock company headquartered in Riyadh in which global banking group HSBC has a minority stake. The bank traces its origins back to British Middle East Bank, which was acquired by HSBC in 1959. In response to Saudi Arabia's restrictions on foreign bank ownership, Saudi Arabian British Bank (SABB) was established in 1978 to manage HSBC's branches and assets in the country.

In May 2018, driven by recent changes to Vision 2030 economic reforms, SABB announced its intention to acquire Alawwal Bank, the first merger of the Saudi banking industry in 20 years. On June 16, 2019, British Bank of Saudi Arabia and Arawal Bank officially and legally merged, making the two banks one legal entity. After the merger was completed, the bank adopted its current name.

SAB is one of the top five banks in Saudi Arabia by deposits, with more than eighty branches in Saudi Arabia and one branch in London, England.

History

British Bank of Iran and the Middle East (1950)

In 1950, British Bank of the Iran and the Middle East became British Bank of the Middle East (BBME), opening branches in Jeddah and Khobar. The profits of the Jeddah division are particularly dependent on the Hajj, the pilgrimage of Muslims to Mecca (Mecca). The Hong Kong and Shanghai Banking Corporation Limited (HSBC) acquired BBME in 1959.

British Bank of Saudi Arabia (1978)

In 1976, the Saudi Central Bank promulgated a comprehensive policy of Sauditalization of the banking sector to address the dominance of foreign banks in the sector and their impact on the Saudi economy. It therefore directed all foreign bank branches to be incorporated in Saudi Arabia (i.e. to become Saudi companies with Saudi capital) and to limit their parent companies to 40% ownership of these new entities.

As a result, HSBC was incorporated in Saudi Arabia in 1978 and opened to local ownership, changing its name to the British Bank of Saudi Arabia (SABB). Ownership became 60% in Saudi Arabia and 40% in HSBC, with which HSBC entered into a technical services agreement

HSBC Holdings UK held 49% of the joint venture, while SABB held 51% until October 2019, when HSBC Group acquired the shares from SABB and became the main shareholder, holding 51% of the shares.

Merger with Alawwal Bank (2019)

On May 16, 2018, SAB (formerly SABB) and Alawwal Bank (formerly Saudi Hollandi Bank) entered into a non-binding agreement regarding SABB's acquisition of Alawwal. The agreement concludes nearly a year of negotiations, with SABB represented in the transaction by US investment bank Goldman Sachs. Under the agreement, Alawwal Bank ceased to exist as a legal entity and was absorbed into SABB, becoming the third largest bank in Saudi Arabia with a market capitalization of $17.20 billion.

SABB shareholders own 73% of the new bank, which is chaired by Saudi businesswoman Lubna Al Olayan. The definitive agreement for the merger deal was announced a week after the Saudi government launched its Financial Sector Development Program, which aims to overhaul the Saudi financial sector to create an effective capital market capable of supporting the goals of the Vision 2030 economic reform program

The merger of the two banks was completed on June 16, 2019. The integration of the two banks was planned to be completed in approximately 18 months

The integration was completed in 18 months. This resulted in the retention of the "Saudi British Bank" brand name.

Services

SAB provides services in investment banking, commercial banking, private banking and Islamic banking. SAB Islamic Financial Solutions (Arabic ：الحلول المالية الإسلامية） is part of SAB's services and is regulated by the Saudi Arabian Monetary Authority and the Shariah Supervisory Board. This ensures that SAB Islamic Financial Solutions strictly adheres to the principles of Shariah.

Credit Rating

In August 2011, Fitch Ratings gave South African banks a long-term issuer default rating (IDR) of "A" with a stable outlook and an "A" viability rating (VR).

In October 2018, Moody's reaffirmed South African banks' local and foreign currency deposit ratings of A1/P-1 and A3/P-2, respectively, in light of the impending merger with Arava Bank.