SAMA encourages bank mergers to boost economy: governor

Saudi Arabia encourages bank mergers to bolster the local sector and overall economy, Ahmed Alkholifey governor of the Saudi Arabian Monetary Authority (SAMA), the Kingdom’s central bank, told Al-Arabiya TV on Sunday.

“The Kingdom is keen to have solid banks. Mergers will create stronger entities that will better serve the national economy, which is likely to see more growth going forward,” Alkholifey said, ruling out new requests for merger.

“The door is open for more banks to get licenses in the Saudi market,” he added.

The planned consolidation of Saudi British Bank (SABB) and Alawwal Bank was approved by the General Authority for Competition.

Meanwhile, the outcomes of National Commercial Bank with rival Riyad Bank merger have not yet been announced.

Speaking about government spending, Alkholifey said it takes some time to materialize and reflect on the local economic growth.

Saudi Arabia’s Q4 2018 economic growth indicators were strong, drawing a bullish outlook for further growth going forward.

“Private consumption and government spending are strong drivers for economic growth,” he noted.

Meanwhile, the new rules for zakat calculation will lead banks to pay between 12 percent and 20 percent of net income.

Long-term investments, bond and government sukuk investments, as well as SAMA deposits are deducted from zakat base, Alkholifey added.