The Saudi Arabian Monetary Agency (Sama), the Gulf kingdom's central bank, has raised its stake in Gulf International Bank (GIB) to 27.5 per cent by buying US-based JP Morgan's 5.3 per cent share in the Bahrain company.
The value of the deal was not disclosed.
Welcoming the deal, Sama Deputy Governor Dr Mohammad Al Jasser said JP Morgan agreed to sell the stake after it was granted a licence to operate in the kingdom.
According to the deal, the six Gulf states Saudi Arabia, Kuwait, Oman, Qatar, Bahrain and the UAE will own 12.8 per cent each in GIB.
Regional status
Gulf International Bank, the largest in the Gulf region, reported consolidated total assets of $20 billion in the three months to March 31, up $800 million from the end of 2004.
Gaby Abdul Noor, managing director of JP Morgan, said the decision to sell the stake in Gulf International Bank came in the wake of JP Morgan and other international banks obtaining licences to open branches to operate in the kingdom.
He said the deal would "eliminate the potential for any conflicts of interest between our business and that of GIB".
"We remain highly confident in GIB's business strategy and management, and look forward to increasing our commitment to Saudi clients through our new branch," he said.
Licence
Bankers attributed the deal to the imminent start of JP Morgan's operations in the kingdom after it was granted a licence in June 2004 to open a branch.
GIB Executive Chairman Dr Khalid Al Faiz said the bank had been providing services to its clients in Saudi Arabia since 1976.
GIB opened its first branch in Riyadh, the Saudi capital, in 2000 and a second one in Jeddah four years later as part of a plan to expand its operations in the Kingdom.
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