UAE bank to open branches in Saudi Arabia

FAB, the UAE’s largest lender, will open up to three branches in the Kingdom as part of its expansion strategy. (REUTERS)
Updated 22 March 2018
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UAE bank to open branches in Saudi Arabia

LONDON: First Abu Dhabi Bank (FAB), the UAE’s largest lender, is poised to establish a commercial banking business in the Kingdom after being granted a license by the Saudi Arabia Monetary Authority (SAMA).
FAB will be able to open up to three branches as part of its expansion strategy that recently saw Riyadh’s Capital Market Authority (CMA) give it permission to establish an investment banking subsidiary.
The Abu Dhabi bank joins Western financial institutions that have shown an interest in operating in KSA as the economy opens in line with the Vision 2030 modernization and reform program.
Citibank, for example, started up in Jeddah in April 2017 after a gap of 13 years, making it the first American bank to put down roots in the Kingdom in more than a decade. Citi won a license to take part in mergers and acquisitions, initial public offerings, privatizations, and other capital markets business.
Goldman Sachs, which has been operating in the Kingdom since 2009 as an agent and underwriter last June won CMA approval for a license to trade equities.
Commenting on the FAB license, Tahnoon Bin Zayed Al-Nahyan, chairman of FAB, said: “In light of the recent securities license approval secured earlier this year, FAB is moving forward with the next phase of our growth plan for the KSA market.
“By providing new opportunities for customers in the region to grow stronger, this new addition to the banking landscape will be another catalyst for the continued advancement of the KSA economic agenda, and will further reinforce the UAE and Saudi Arabia’s solid relationship.”
CEO Abdulhamid Saeed said: “These developments give us the platform to tap into the region’s largest economy with the full strength and capabilities of the FAB offering, and build on the strong potential of the KSA market. We are confident that our expansion into Saudi Arabia will enhance our regional presence and will provide an important contribution to our international network.”
Headquartered in Abu Dhabi’s Khalifa Business Park, FAB’s international network spans over 19 countries outside the UAE.
Based on audited financial information as at December-end 2017, FAB had total assets of $182 billion.
Recent reports by Bloomberg have suggested that Citi, Goldman Sachs, Morgan Stanley and HSBC have been appointed to advise on Saudi Arabia’s global borrowing program. This involves the refinancing and extension of the $10 billion loan from two years ago, and a new bond which could rival the record-breaking $17.5 billion issue of 2017.
The Saudi stock exchange opened itself to direct investment by foreign institutions in mid-2015 and last year eased restrictions on foreign ownership in its stock market to improve the investment environment.
International firms such as BlackRock, Citigroup, HSBC and Ashmore Group have since been among those to join the list of institutional investors that can directly trade the market.


Palestinians in financial crisis after Israel, US moves

Updated 22 March 2019
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Palestinians in financial crisis after Israel, US moves

  • A Ramallah-based economics professor said the Palestinian economy more generally, remain totally controlled by and reliant on Israel
  • Israeli-Palestinian peace efforts have been at a standstill since 2014

RAMALLAH, Palestinian Territories: The Palestinian Authority faces a suffocating financial crisis after deep US aid cuts and an Israeli move to withhold tax transfers, sparking fears for the stability of the West Bank.
The authority, headed by President Mahmud Abbas, announced a package of emergency measures on March 10, including halving the salaries of many civil servants.
The United States has cut more than $500 million in Palestinian aid in the last year, though only a fraction of that went directly to the PA.
The PA has decided to refuse what little US aid remains on offer for fear of civil suits under new legislation passed by Congress.
Israel has also announced it intends to deduct around $10 million a month in taxes it collects for the PA in a dispute over payments to the families of prisoners in Israeli jails.
In response, Abbas has refused to receive any funds at all, labelling the Israeli reductions theft.
That will leave his government with a monthly shortfall of around $190 million for the length of the crisis.
The money makes up more than 50 percent of the PA’s monthly revenues, with other funds coming from local taxes and foreign aid.

While the impact of the cuts is still being assessed, analysts fear it could affect the stability of the occupied West Bank.
“If the economic situation remains so difficult and the PA is unable to pay salaries and provide services, in addition to continuing (Israeli) settlement expansion it will lead to an explosion,” political analyst Jihad Harb said.
Abbas cut off relations with the US administration after President Donald Trump declared the disputed city of Jerusalem Israel’s capital in December 2017.
The right-wing Israeli government, strongly backed by the US, has since sought to squeeze Abbas.
After a deadly anti-Israeli attack last month, Prime Minister Benjamin Netanyahu said he would withhold $138 million (123 million euros) in Palestinian revenues over the course of a year.
Israel collects around $190 million a month in customs duties levied on goods destined for Palestinian markets that transit through its ports, and then transfers the money to the PA.
Israel said the amount it intended to withhold was equal to what is paid by the PA to the families of prisoners, or prisoners themselves, jailed for attacks on Israelis last year.
Many Palestinians view prisoners and those killed while carrying out attacks as heroes of the fight against Israeli occupation.
Israel says the payments encourage further violence.
Abbas recently accused Netanyahu’s government of causing a “crippling economic crisis in the Palestinian Authority.”
The PA also said in January it would refuse all further US government aid for fear of lawsuits under new US legislation targeting alleged support for “terrorism.”

Finance Minister Shukri Bishara announced earlier this month he had been forced to “adopt an emergency budget that includes restricted austerity measures.”
Government employees paid over 2,000 shekels ($555) will receive only half their salaries until further notice.
Prisoner payments would continue in full, Bishara added.
Nasser Abdel Karim, a Ramallah-based economics professor, told AFP the PA, and the Palestinian economy more generally, remain totally controlled by and reliant on Israel.
The PA undertook similar financial measures in 2012 when Israel withheld taxes over Palestinian efforts to gain international recognition at the United Nations.
Abdel Karim said such crises are “repeated and disappear according to the development of the relationship between the Palestinian Authority and Israel or the countries that support (the PA).”
Israel occupied the Gaza Strip and the West Bank, including now annexed east Jerusalem in the Six-Day War of 1967 and Abbas’s government has only limited autonomy in West Bank towns and cities.
“The problem is the lack of cash,” economic journalist Jafar Sadaqa told AFP.
He said that while the PA had faced financial crises before, “this time is different because it comes as a cumulative result of political decisions taken by the United States.”
Abbas appointed longtime ally Mohammad Shtayyeh as prime minister on March 10 to head a new government to oversee the crisis.
Abdel Karim believes the crisis could worsen after an Israeli general election next month “if a more right-wing Israeli government wins.”
Netanyahu’s outgoing government is already regarded as the most right-wing in Israel’s history but on April 9 parties even further to the right have a realistic chance of winning seats in parliament for the first time.
Israeli-Palestinian peace efforts have been at a standstill since 2014, when a drive for a deal by the administration of President Barack Obama collapsed in the face of persistent Israeli settlement expansion in the West Bank.