DUBAI (Reuters) - Saudi British Bank (SABB) <1060.SE> has secured a binding agreement to take over smaller rival Alawwal Bank <1040.SE> to create Saudi Arabia's third-biggest lender with a market capitalisation of about $17.2 billion (£13.3 billion).
Under the deal that was announced in May as a non-binding agreement, Alawwal's assets and liabilities will be transferred to SABB, the larger of the two lenders, the banks said.
The first major banking tie-up in the kingdom in two decades has taken longer than expected, partly because the regulatory environment for bank acquisitions in Saudi Arabia is relatively untested.
The deal values each Alawwal bank share at 16.26 riyals ($4.34) and Alawwal's existing issued ordinary share capital at around 18.6 billion riyals, the statement said.
On completion of the merger, SABB's existing shareholders will own 73 percent of the combined bank and Alawwal's shareholders will own 27 percent on a fully diluted basis.
SABB is 40 percent owned by HSBC Holdings <HSBA.L><0005.HK> and Alawwal is 40 percent owned by a consortium that includes Royal Bank of Scotland (RBS) <RBS.L>, which has been trying to reduce its stake for some time.
(Reporting by Tom Arnold; Editing by Edmund Blair)