Kuwait City

 Shares in National Commercial Bank went on sale yesterday in Saudi Arabia’s largest-ever initial public offering, which at $6bn is also one of the biggest in the world this year.

The IPO comes despite opposition from the kingdom’s top religious leader and follows a difficult week on Gulf stock markets.

NCB, the last of 12 Saudi banks to go public, is offering one-quarter of its 2bn shares, including 300mn for the public along with another 200mn which will be allocated to the state pension agency.

The offer would be worth $6bn if all 500mn shares are purchased at the offered price of 45 riyals ($12, €9.4) each.

One analyst said it was too early to gauge subscriber interest in the offer, which runs until November 2, after which the bank’s shares will be traded publicly for the first time.

The IPO comes ahead of an expected easing next year of foreign investment restrictions in the country’s Tadawul ALL-Shares Index (TASI).

Saudi Arabia is Opec’s biggest oil exporter and its economy has been one of the best performing in the Group of 20 leading nations, according to the International Monetary Fund.

Dubai and Saudi Arabia last week led stock price falls among all seven Gulf Co-operation Council (GCC) states, as oil prices continued to slide and world markets dropped on fears of a weaker economy and global insecurity.

The TASI declined by 12% last week but was still up 11.9% since the start of the year.

yesterday the TASI closed 2.39% higher at 9,775.32 points.

NCB’s Shariah advisory council on Thursday declared the share offer to be acceptable under Islamic law, but Saudi Arabia’s Grand Mufti, Sheikh Abdul Aziz al-Sheikh, said on Friday that the IPO is forbidden under Islam, which bans usury.

Only three of Saudi Arabia’s 12 banks are fully compliant with Islamic Shariah laws.

Columnist Abdullah bin Bakhiet, writing in Saturday’s Al-Riyadh newspaper, dismissed the religious controversy, saying it has accompanied every IPO by a bank in the kingdom.

He said “some people brew the storm just to minimise the number of subscribers” and guarantee themselves a larger share.

“The NCB’s IPO subscription is considered the largest ever in the kingdom’s financial market,” the official Saudi Press Agency said, announcing the start of the share offer.




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