Citigroup eyes Saudi expansion as banks aim to capitalise on reforms

Citigroup is considering seeking a full banking licence in Saudi Arabia as Western banks aim to capitalise on Saudi economic reforms, with rival HSBC announcing it has won mandates for several privatisations in the kingdom

More than a dozen foreign banks have licences to operate branches in Saudi Arabia, battling for business resulting from the kingdom’s efforts to itself off reliance on oil revenues.

US bank Citi ended a five-decade presence in Saudi Arabia in 2004 with the sale of its 20 per cent stake in Samba Financial but in 2015 won permission to invest directly in the local stock market and in January this year gained approval to begin investment banking operations in the kingdom.

“We’re looking at whether or not we should expand our activities here into a full banking licence,” James Forese, the president and chief executive of the bank’s institutional clients group, said at a business conference in Riyadh.

Other banks seeking a Saudi licence include Credit Suisse, while Goldman Sachs plans to expand its services in the kingdom after being cleared to trade equities there.

Read: Citigroup targets rapid Middle East and Africa growth in 2018

The banks are vying for a role in Saudi Aramco’s planned initial public offering, which could float up to 5 per cent of the state oil giant and make it the world’s biggest oil company by market capitalisation.

Citi has already played an active role in Saudi Arabian finance and was one of the banks that helped to arrange the government’s $11bn US dollar bond issue last month.

Read: Citi gets Saudi go-ahead for investment banking business

The kingdom is now working on a pipeline of privatisations aimed at generating up to SAR40bn ($10.7bn) in non-oil revenues by 2020 and creating up to 12,000 jobs, according to an official document published last month.

Read: Saudi privatisation plans target $11bn in non-oil revenues by 2020

HSBC has been mandated for several of the planned privatisations and will announce them very soon, Samir Assaf, HSBC’s chief executive of global banking and markets, said at Wednesday’s conference.

The bank is “very much contributing to the privatisation programme”, he said.

HSBC Saudi Arabia is already acting as an adviser on the sale process for the kingdom’s flour milling sector and the Saudi Stock Exchange’s planned flotation. It also has an advisory role on the proposed Aramco listing.