Al Rajhi: Saudi banks benefit from Aramco IPO fees shortly

“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.

You might also like

This website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish. Accept Read More