Gulf lender GIB Launches region’s first online-only retail bank

Called “Meem” – the letter M in Arabic – the new retail banking platform will offer personal finance products and credit cards in Saudi Arabia.



Gulf International Bank (GIB) has launched the Middle East’s first online-only consumer banking business, seeking to diversify after almost collapsing during the global financial crisis and to tap into a young, tech-savvy population.

Until now, GIB has been solely a wholesale bank – which provides services to big companies and financial institutions. It needed a bailout from the Saudi government after suffering $757m of losses in 2007 from investing in complex debt instruments linked to the US subprime housing crisis.

Its ability to fund itself from wholesale money markets was also compromised as banks stopped lending to each other, meaning it had to scale back its operations. Its assets roughly halved between 2007 and 2010, and remained nearly a third below 2007 levels at the end of 2013, according to financial statements.

Called “Meem” – the letter M in Arabic – the new retail banking platform will offer personal finance products and credit cards in Saudi Arabia, the region’s largest economy.

Around two-thirds of the population are under 30, and the kingdom is the biggest user of YouTube per capita in the world and among the top 10 nations for Twitter use.

The new business will give Bahrain-based GIB – 97 per cent-owned by the Saudi government – a more stable funding base, GIB chief executive Yahya Alyahya said at a launch event.

“It will be a mitigant for the bank against any potential financial crisis in the future so we will not face the problems that we faced in 2008, which took us to the point where the bank could have defaulted,” he told reporters.

“Dealing with retail is also profitable in itself, so that is going to enhance our profitability.”

GIB aims to have around a three per cent share of the Saudi consumer banking market by 2020.

“Our strategy is to be a pan-Gulf universal bank, so after Saudi and when the proposition proves successful, we will move it to other countries,” Alyahya said, adding it could launch into another unspecified Gulf country by next year.