Saudi Arabian lender National Commercial Bank (NCB) has started initial discussions for a merger with domestic peer Riyad Bank.
The deal, if successful, will create one of the largest lenders in the Middle Eastern region with $182bn in assets.
NCB in a statement said that the merger talks may not result into a transaction and it will be subject to regulatory and shareholders’ approvals. It also added that the merger will not result in staff redundancies.
Following the announcement, Riyad Bank share prices appreciated by 5.2%, while NCB’s dropped by 1.1%, reported Bloomberg.
The move follows the recent merger announcement by Saudi Arabian lenders SABB and Alawwal Bank.
In October, both the banks signed an agreement to merge their operations to create a combined lender with around $71bn in assets.
Earlier in May, SABB and Alawwal Bank signed a preliminary merger deal.
Gulf region including Saudi Arabia is currently pursuing multiple mergers of banking entities in a bid to consolidate the financial services industry and make it more competitive.
There are around 30 banks operating in Saudi Arabia catering to more than 30 million people.
Other lenders in the Gulf region mulling mergers include Kuwait Finance House and Ahli United Bank; National Bank of Bahrain and Bahrain Islamic Bank; and Alizz Islamic Bank and Oman Arab Bank.