Impact of Merger on Employment Contracts: Case study on the merger of SABB and Alawwal Bank:

Abstract

Bank mergers are one manifestation of financial globalization characterized by economic blocs, and they have increased in Arab countries, including the Kingdom of Saudi Arabia, particularly since its membership in the World Trade Organization and the existence of an open competitive market with foreign institutions having highly competitive and sophisticated capabilities. Mergers have become an important instrument for restructuring to increase resilience in a competitive context. The restructuring may impact bank employees' employment contracts, affecting their performance. As a result, the study examined the impact of the SABB and Alawwal Bank merger on employment contracts as a case study of bank mergers in the Kingdom of Saudi Arabia. The study discovered that Saudi law did not define mergers but referred to how the merger is carried out. It was also discovered that SABB and Alawwal Bank have merged by addition, while there is a gap in Article 18 of the Labor Law that allows the merged company to place the responsibility for ensuring the workers' benefits on the merging company. Merger and internal reorganization processes may result in job losses, particularly if merging banks focus on work culture, training, and qualification. Based on the previous outcomes, the researcher feels that the merger is an effective solution for failing institutions that are threatened with insolvency, taking into consideration that the Kingdom's commercial markets remained completely open after joining the World Trade Organization, in addition to increased competition and the presence of major local and foreign giant banks inside the Kingdom.