Saudia privatization in final stages

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Updated 12 August 2013
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Saudia privatization in final stages

The privatization of Saudi Arabian Airlines is in the final stages, said Prince Fahd bin Abdullah, president of the General Authority of Civil Aviation, and chairman of the airline’s board of directors.
“We hope Saudia’s privatization process would be completed shortly,” the prince told reporters after witnessing the signing of an agreement for the privatization of the Saudi Aerospace Engineering Industries (SAEI).
He said Qatar Airways and Gulf Air, which are licensed to operate domestic flights in the Kingdom, are scheduled to start their operations within the next three months after completing some establishment procedures and opening their offices in the Kingdom.
Saudia has sold 30 percent of its stake in SAEI to Tarabut Aircraft Maintenance Company, an affiliate of Integrated Transport Company (ITC). The agreement between the two organizations was signed by Prince Sultan bin Muhammad bin Saud Al-Kabir, chairman of ITC, and Khaled Al-Molhem, director general of Saudia.
Prince Fahd emphasized the important role of SAEI, which provides aircraft maintenance services not only for Saudia but also for foreign airlines. “We hope it would become a major aircraft maintenance center in the Middle East,” the chairman said.
Al-Molhem said: “This is another important step toward privatization of the airline’s strategic units and it was decided after conducting adequate studies with the support of international consulting firms.”
The Saudia chief underscored the desire of investors to participate in Saudia’s privatization process. “This strategic partnership will have great benefits for the Kingdom as well as investors. This is a model of successful partnership between the public and private sectors,” he added.
Prince Fahd chaired a meeting of Saudia’s board to discuss the financial reports and operational performance during the first half of 2013, its Haj and Umrah plan for this year and the airline’s efforts to modernize its fleet, develop its IT infrastructure and improve services to passengers.
“We have to achieve higher operational rates to compete with other airlines at regional and international levels,” the chairman said.


China central bank moves to support financial institutions

Chinese 100 yuan banknotes are seen on a counter of a branch of a commercial bank in Beijing, China, March 30, 2016. (REUTERS)
Updated 24 July 2019
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China central bank moves to support financial institutions

  • Many market watchers believe the PBOC will adjust its money market rates in early August if the US Federal Reserve cuts its key rate, as widely expected, on July 31

BEIJING: China’s central bank offered medium-term loans to financial institutions on Tuesday in an attempt to get more affordable funds to struggling smaller firms, as it steps up efforts to support a slowing economy.
With growth in China sliding to a near 30-year low, global financial markets are closely watching to see if the People’s Bank
of China (PBOC) will trim interest rates soon in line with expected easing by other central banks.
While the PBOC left rates on the medium-term loans unchanged on Tuesday, and the injection had been expected, it funneled more lower-cost funds into a credit program aimed specifically at reducing strains on small and medium-sized businesses.
The PBOC lent 497.7 billion yuan ($72.31 billion), including 200 billion yuan through one-year medium-term lending facility (MLF) loans and another 297.7 billion yuan through targeted medium-term lending facility (TMLF) loans, it said in a statement.
The size of the TMLF funding was 11 percent larger than the last such injection in April.
Interest rates for both liquidity facilities were unchanged from previous levels. The one-year MLF and TMLF remained at 3.30 percent and 3.15 percent, respectively.
The total amount roughly offset 502 billion yuan of MLF loans that were set to expire on Tuesday,
ensuring a steady supply of cash.
“Replacing some MLF with TMLF effectively cut funding costs. We should focus on the lower rate, instead of the net drainage on the day,” said Frances Cheung, head of Asia macro strategy at Westpac in Singapore.

BACKGROUND

China is keeping all its policy tools within reach as the trade war with the US gets longer and costlier, but sees more aggressive action like interest rate cuts as a last resort given concerns about rising debt.

The central bank said banking system liquidity will be “reasonably ample” after the lending operations.
About 160 billion yuan in reverse repos were also set to expire on Tuesday, according to Reuters calculations based on official data. The PBOC did not say in its statement whether it had drained funds from money markets on Tuesday.

BACKGROUND

China is keeping all its policy tools within reach as the trade war with the US gets longer and costlier, but sees more aggressive action like interest rate cuts as a last resort given concerns about rising debt.

Some traders said Tuesday’s moves were in line with the PBOC’s support measures since last year, which have been aimed at getting more affordable financing to small and private companies.
While Chinese regulators have urged banks to keep lending to distressed firms, such companies are often considered higher credit risks than big, state-owned enterprises.
Traders and analysts still expect the PBOC to cut rates on some of its liquidity tools in coming months.
The PBOC has already slashed banks’ reserve requirement ratios (RRR) six times since early 2018 to free up more money to lend, while guiding short-term market rates lower through liquidity injections in various forms.
Many market watchers believe the PBOC will adjust its money market rates in early August if the US Federal Reserve cuts its key rate, as widely expected, on July 31.
Cheung from Westpac said it was still possible the PBOC could lower the MLF rate after the Fed’s policy decision.
She also has pencilled in a 50 basis-point RRR cut this quarter, and another in the fourth quarter.