Coronavirus, low oil prices set to speed up Gulf bank mergers

Coronavirus, low oil prices set to speed up Gulf bank mergers

The twin shocks of lower oil prices and the coronavirus fallout will speed up bank mergers in the Gulf, according Moody's Investors Service, which said financial concerns will play a larger role in encouraging deals.

“Merger deals will be increasingly motivated by purely financial considerations” as opposed to common shareholders that drove some of the combinations in the past years, analysts including Badis Shubailat and Nitish Bhojnagarwala wrote in a note.

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“Mergers and acquisitions will remain a recurring credit theme over coming years.”

Even before the pandemic hit, the Middle East's financial-services industry was witnessing a wave of consolidation as banks sought ways to improve competitiveness and boost capital amid slowing economic growth.

The National Commercial Bank-Samba merger would create a banking giant in terms of loans with almost a 30%