“The Saudi banks would benefit from Aramco’s IPO fees shortly,” Mazen Al-Sudairy, head of research at Al Rajhi Capital, predicted.
“The main point is that in the near term there will be profits of up to SAR369mn, and a year from now, they will be negative by about SAR333mn,” Al-Sudairy added.
Al-Sudairy pointed out that negative profits of the IPO constitute a small number of the total profits of Saudi banks, which is estimated to reach SAR48bn, constituting less than 1% of the profits of the sector.
“The IPO will change the inter-bank deposit base,” Al-Sudairy said.
Three informed sources told Reuters news agency that banks working on Aramco’s IPO would collectively charge fees of $90mn or less.
As for IPO, the three sources said the banks would charge 35 basis points of the funds received. This equates to about $90mn if the company priced the deal at the ceiling of the pricing range, raising $25.6bn but it would remain the world’s largest IPO ever.
Saudi banks such as National Commercial Bank, Samba Financial Group and Al Rajhi Bank would benefit from selling a large portion of the shares to local investors and providing them with financing.