DUBAI, April 26 Banking shares in Saudi Arabia
may buoy the bourse on Wednesday after two large banks said they
were in initial stages of tie-up talks while strong emerging
equity markets may help shares in the United Arab Emirates and
Saudi lenders Alawwal Bank and Saudi British Bank
have agreed to start talks about a merger that could
create the kingdom's third biggest bank with assets of nearly
Earlier this month, Alawwal posted a 36.7 percent drop in
quarterly profit as the lender was hit by higher impairment
charge for credit losses, while SABB reported a 9.3 percent drop
in net profit for the period.
The banks said on Tuesday that any merger agreement would be
subject to a number of conditions.
Nevertheless, this would be the first time banks in the
oil-exporting country have considered a merger since oil prices
fell to very low levels, and it may ignite interest in banking
stocks in general.
"If this were to happen it would be a big move, but also
it's a strategic one, and banking shares will certainly move
today," said a Jeddah-based asset manager.
Emerging-market stocks rose almost 1 percent, extending
gains from the previous session to touch their highest since
June 2015, good news for regional markets that are members of
international emerging market indexes.
So far this year Dubai, Abu Dhabi and Qatar have lagged
behind other emerging markets as crude prices have recently been
trading close to their one-year average price of around $51.00
a barrel and as first-quarter earnings from local companies have
given little reason for a sustained rise in those stock markets.
Dubai's index, however, may come under pressure as
the shares of the largest listed developer Emaar Properties
(Reporting by Celine Aswad; Editing by Subhranshu Sahu)