Al Rajhi Bank Capital Increase Approved: 50% Bonus Issue | Saudi Arabia
- Saudi Arabia’s Capital Market Authority (CMA) has approved Al Rajhi Bank’s request to increase its capital by 50%, from SAR 40 billion to SAR 60 billion, through a...
- The CMA stipulated that the extraordinary general assembly to approve the capital increase must be held within six months of the approval date, and that Al Rajhi Bank...
- The move, initially recommended by Al Rajhi Bank’s board in January 2026, aims to bolster the bank’s financial position and support its strategic objectives.
Saudi Arabia’s Capital Market Authority (CMA) has approved Al Rajhi Bank’s request to increase its capital by 50%, from SAR 40 billion to SAR 60 billion, through a one-for-two bonus share distribution. The decision, announced on , will see the bank capitalize SAR 20 billion from retained earnings, increasing the number of outstanding shares from 4 billion to 6 billion.
The CMA stipulated that the extraordinary general assembly to approve the capital increase must be held within six months of the approval date, and that Al Rajhi Bank must fulfill all regulatory requirements. Shareholders of record, registered with the Securities Depository Center (Edaa) as of the close of trading on the second trading day following the date of the extraordinary general meeting, will be eligible for the bonus shares. The specific record date will be determined by the bank’s board of directors at a later time.
The move, initially recommended by Al Rajhi Bank’s board in , aims to bolster the bank’s financial position and support its strategic objectives. According to Abdullah Bin Sulaiman Al Rajhi, Chairman of the Board of Directors, the capital increase will contribute to supporting the bank’s strategic plans, growth, and expansion in its financing and investment portfolios. He further stated that the increase will enable the bank to keep pace with economic growth within the Kingdom and support Saudi Arabia’s Vision 2030 by providing financial solutions to clients and companies, including small and medium enterprises.
The capitalization of SAR 20 billion from retained earnings represents a significant reinvestment of profits back into the bank’s capital base. This strengthens the bank’s financial solvency and provides a buffer for future growth and potential economic headwinds. The increase in shares from 4 billion to 6 billion will dilute existing ownership slightly, but is expected to be offset by the bank’s improved financial strength and growth prospects.
Al Rajhi Bank is a leading financial institution in Saudi Arabia, and this capital increase underscores its commitment to supporting the Kingdom’s economic development. The bank’s focus on financing and investment portfolios, coupled with its support for small and medium enterprises, aligns with the goals of Vision 2030, which aims to diversify the Saudi economy and reduce its reliance on oil.
The CMA’s approval process reflects the regulatory body’s commitment to maintaining the stability and integrity of the Saudi financial market. The requirement for an extraordinary general assembly ensures that shareholders have a voice in the capital increase, while the stipulation regarding regulatory compliance underscores the importance of transparency, and accountability.
The details of the capital increase are as follows:
| Current Capital | SAR 40 billion |
| Current Number of Shares | 4 billion |
| Percentage of Increase | 50% |
| Capitalization Method | Capitalizing SAR 20 billion from retained earnings |
| New Capital | SAR 60 billion |
| New Number of Shares | 6 billion |
| Record Date | Shareholders of record and those registered with Edaa by the close of the second trading day following the extraordinary general meeting (EGM) |
This capital increase is a positive development for Al Rajhi Bank and the Saudi financial sector. It demonstrates the bank’s strong financial performance and its commitment to supporting the Kingdom’s economic growth. The move is likely to be well-received by investors and will further solidify Al Rajhi Bank’s position as a leading financial institution in the region.
The decision by Al Rajhi Bank to increase its capital through a bonus share issue, rather than a rights issue, is noteworthy. A bonus share issue distributes new shares to existing shareholders without requiring them to invest additional capital. This can be seen as a shareholder-friendly move, as it increases their ownership stake in the bank without any financial outlay. A rights issue, conversely, would require shareholders to purchase additional shares to maintain their proportional ownership.
Looking ahead, the increased capital base will allow Al Rajhi Bank to pursue new growth opportunities and expand its lending activities. This is particularly important in the context of Saudi Arabia’s ambitious economic diversification plans, which require significant investment in infrastructure, technology, and other sectors. The bank’s strengthened financial position will also enhance its ability to withstand potential economic shocks and maintain its stability in a volatile global environment.