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Abu Dhabi, UAEFriday 16 November 2018

Saudi Arabia will not penalise foreign banks that boycotted investment forum, central bank chief says 

Financial institutions can still apply to obtain banking licences in the kingdom, Sama boss tells Al Arabiya

The central bank governor said the kingdom will continue to defend the Saudi riyal's peg to the dollar, noting that the current pressure on the peg is much lower than when oil prices crashed. AFP
The central bank governor said the kingdom will continue to defend the Saudi riyal's peg to the dollar, noting that the current pressure on the peg is much lower than when oil prices crashed. AFP

Foreign banks which pulled out of an investment forum in Saudi Arabia amid an outcry over the killing of Saudi journalist Jamal Khashoggi will not be penalised, the kingdom's central bank governor said.

Financial institutions which boycotted the Future Investment Initiative in Riyadh can still apply for and obtain banking licences in the kingdom, Saudi Arabian Monetary Authority's governor Ahmed Al Kholifey, told Al Arabiya on Wednesday.

"We deal in a professional manner," Mr Al Kholifey said in the TV interview.

Many high-profile global finance and company executives declined to attend the Future Investment Initiative that started on Tuesday but sent mid-level representatives instead, in a sign they wanted to maintain business relations with the kingdom. Saudi Arabia forged ahead with the second edition of the conference in Riyadh, where it announced more than $50 billion worth of deals on the first day.

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Read more:

Saudi Arabia to sign deals worth $50bn as Future Investment Initiative begins

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The Saudi central bank has received four applications from banks in the region to set up in the kingdom, which are still under study, although no international lenders have applied, Mr Al Kholifey said.

Credit Suisse said in July it is seeking a full banking licence in the Middle East's biggest economy, while Citigroup obtained an investment banking licence that will allow it to return to the kingdom after a 13-year absence. Dubai lender Emirates NBD said in September it expanded its network to three cities in the kingdom with the addition of a branch in the oil-rich eastern province of Khobar.

Profits at Saudia banks are set to outperform their Gulf peers this year as the economy improves on greater government spending and higher interest rates boost net interest margins, Moody’s Investors Service said in March.

The central bank governor also said the kingdom would continue to defend the Saudi riyal's peg to the dollar, noting that the current pressure on the peg is much lower than when oil prices crashed.

The riyal started falling against the dollar on October 15 amid concerns that the circumstances of Mr Khashoggi's death may affect foreign investors' appetite for business opportunities in the kingdom. The dollar is currently trading at 3.7515 against the riyals compared with 3.7526 on October 15.