Bahrain’s GIB converts Saudi operations into local bank
Newly establish Saudi lender will be equally owned by PIF and GIB
Gulf International Bank, the Bahrain-headquartered lender, completed the conversion of its existing branch network in Saudi Arabia into a locally incorporated bank with a paid-up capital of 7.5 billion Saudi riyals (Dh7.35bn).
Gulf International Bank Saudi Arabia, as the new lender is known, is equally owned by parent GIB and Saudi Arabian sovereign wealth fund, the Saudi Public Investment Fund, GIB said on Sunday.
“The establishment of GIB Saudi Arabia is an important milestone ... and is expected to contribute positively to performance and profitably,” said GIB Saudi Arabia chairman Abdulla Al Zamil.
PIF’s contribution and its partnership, he said, will enable the bank to further accelerate the growth of “operations and customer base in the kingdom as well as in other GCC countries”.
GIB, which has been operating in the kingdom for almost two decades, is the first financial institution to be allowed a conversion into a local bank. It received initial approval from the Saudi Council of Ministers in May 2017 and has branches in Riyadh and Jeddah. The lender will look to further strengthen and build its presence in the kingdom, the biggest banking market in the Arabian Gulf, it added.
Regional and international banks have been keen on establishing local presences in Saudi Arabia, the largest Arab economy and the world’s biggest oil exporting country, to capitalise on growth potential in the wake of the country’s economic overhaul.
Saudi Arabia’s push to transform its economy and its plans to sell stakes in state-owned entities including Saudi Aramco, the world’s biggest oil producing company, has opened up new business avenues for banks.
Last year, Saudi Arabia's crown prince Mohammed Bin Salman, who is driving the economic reforms of the country, said about 20 state-controlled companies will be privatised.
However, despite immense potential in both equity and debt advisory businesses, only a handful of international banks such as Standard Chartered, JP Morgan, Deutsche Bank and BNP Paribas have licences to operate in the kingdom. Others including HSBC have maintained presence through minority stakes in local lenders.
The largest Japanese lender Mitsubishi UFJ Financial Group, Abu Dhabi’s FAB and Dubai's Emirates NBD and Citi are among other international banks that received licences to launch operations in Saudi Arabia.
Updated: April 21, 2019 05:33 PM