DUBAI (Reuters) - Shares in Saudi Arabia’s Alawwal Bank (1040.SE) rose 9 percent in early trading on Wednesday after it agreed to start talks with Saudi British Bank 1060.SE (SABB) about a merger that could create the kingdom’s third biggest bank with assets of nearly $80 billion.
Shares in SABB increased 6.8 percent in early trading after the two lenders announced the merger plans late on Tuesday.
Most other Saudi bank stocks also rose.
Muhammad Faisal Potrik, head of research at Riyad Capital, said the merger could be a precursor to the start of an M&A trend in the banking and other sectors such as petrochemicals, insurance and retail.
“We would view completion of this merger as a very positive development,” he said.
Reporting By Tom Arnold and Celine Aswad; additional reporting by Katie Paul