DUBAI, April 26 Two Saudi banks soared in early
trade on Wednesday after saying they were in initial stages of a
merger helping lift the mood in other lenders while shares of
Abu Dhabi's TAQA slump after a corporate rating downgrade.
On Wednesday Alawwal Bank agreed to start talks
with Saudi British Bank (SABB) about a tie-up that
could create the kingdom's third biggest bank with assets of
nearly $80 billion.
Shares in Alawwal soared by 9.5 percent, not far off the 10
percent daily limit, after 20 minutes of trade while SABB jumped
"While the merger, if it goes through, is good news for both
lenders, Alawwal will benefit more from the tie up from reduced
operating cost," said Mohammad al Shammasi, chief executive of
Riyadh based Derayah Financials.
Most other lenders were also robust, helping lift the Saudi
index up 0.2 percent.
Elsewhere, in Abu Dhabi shares of energy company Abu Dhabi
National Energy dropped 3.3 percent on news that
rating agency S&P had downgraded TAQA's credit rating to 'A-'
from 'A' and gave it a 'negative' outlook from 'stable'.
S&P said the downgrade came as a result of "recent
related-party transactions at TAQA" which raises "potential
risks to our view of the level of government support".
Earlier this month state owned utility company, Adewa,
increased its stake in loss-making TAQA, days after it granted
the energy company land valued at 18.7 billion dirhams ($5.1
The Abu Dhabi index, however, was up 0.1 percent with
main support from shares of the largest listed company,
telecommunications operator Etisalat after it reported
a 4.5 percent rise in first-quarter net income from the prior
year period to 2.09 billion dirhams, broadly in line with
In Dubai, most shares rose with the largest listed
developer, Emaar Properties, adding 0.1 percent
despite its shares trading ex-dividend on Wednesday.
Shares of Qatar's largest petrochemicals maker Industries
Qatar were up 1.1 percent after reporting a first
quarter net profit of 928 million Qatar riyals, up 33 percent
from the prior year period and above the 866.25 million riyals
three analysts had on average forecast the industrial company to
make in the period.
The company attributed the rise in profit to higher product
prices and improved operating costs.
Doha's index was down 0.2 percent as 11 blue chips
(Reporting by Celine Aswad; Editing by Toby Chopra)