Newspaper: a law suit against five banks for violating funding rules in NCB IPO

A former banker, Amjad Al Badra, filed a law suit for the Saudi Arabian Monetary Agency (SAMA) against five banks for violating funding rules in the National Commercial Bank’s IPO.

Al Badra accused the banks of violating SAMA’s rule which requires the maximum amount of funding to be 50% of the IPO amount. SAMA’s instructions also require that funding amount shouldn’t be more that SAR 2m and the amount should be financed from the subscriber’s own resources.

He commented that bank’s funding prohibited small retail investors from participating in the IPO as the average subscription amount per investor was SAR 247,000.

Al Badra added that he will file another law suit for administrative court in Dammam if SAMA doesn’t respond to this law suit within three days.

According to Argaam, 1.25m investors subscribed to NCB’s IPO with a coverage ratio of 2301% and funds raised were SAR 310.7bn.

2000 shares were allocated to each individual and 1.256% of additional shares requested.