Citi considers Saudi expansion as banks aim to capitalize on reforms

Citi has already played an active role in Saudi Arabian finance and was one of the banks that helped to arrange the government’s $11 billion bond issue last month. (Reuters)
Updated 02 May 2018

Citi considers Saudi expansion as banks aim to capitalize on reforms

RIYADH: Citigroup is considering seeking a full banking license in Saudi Arabia as Western banks aim to capitalize on Saudi economic reforms, with rival HSBC announcing it has won mandates for several privatizations in the kingdom.
More than a dozen foreign banks have licenses 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 percent 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 license,” 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 license include Credit Suisse, while Goldman Sachs plans to expand its services in the kingdom after being cleared to trade equities there.
The banks are vying for a role in Saudi Aramco’s planned initial public offering, which could float up to 5 percent of the state oil giant and make it the world’s biggest oil company by market capitalization.
Citi has already played an active role in Saudi Arabian finance and was one of the banks that helped to arrange the government’s $11 billion bond issue last month.
The kingdom is now working on a pipeline of privatizations aimed at generating up to 40 billion riyals ($10.7 billion) in non-oil revenues by 2020 and creating up to 12,000 jobs, according to an official document published last month.
HSBC has been mandated for several of the planned privatizations 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 privatization program,” 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.

Merkel seeks united front with China amid Trump trade fears

Updated 22 May 2018

Merkel seeks united front with China amid Trump trade fears

  • Merkel seeks common ground to ward off trade war
  • Plans complicated by US policy moves

Chancellor Angela Merkel visits China on Thursday, seeking to close ranks with the world’s biggest exporting nation as US President Donald Trump shakes up explosive issues from trade to Iran’s nuclear deal.

Finding a common strategy to ward off a trade war and keep markets open will be Merkel’s priority when she meets with President Xi Jinping, as Washington brandishes the threat of imposing punitive tariffs on aluminum and steel imports.

“Both countries are in agreement that open markets and rules-based world trade are necessary. That’s the main focus of this trip,” Merkel’s spokeswoman Martina Fietz said in Berlin on Friday.

But closing ranks with Beijing against Washington risks being complicated by Saturday’s deal between China and the US to hold off tit-for-tat trade measures.

China’s economic health can only benefit Germany as the Asian giant is a big buyer of Made in Germany. But a deal between the US and China effectively leaves Berlin as the main target of Trump’s campaign against foreign imports that he claims harm US national security.

The US leader had already singled Germany out for criticism, saying it had “taken advantage” of the US by spending less than Washington on NATO.

Underlining what is at stake, French Economy Minister Bruno Le Maire warned the US-China deal may come “at the expense of Europe if Europe is not capable of showing a firm hand.”

Nevertheless, Merkel can look to her carefully nurtured relationship with China over her 12 years as chancellor.

No Western leader has visited Beijing as often as Merkel, who will be undertaking her eleventh trip to the country.

In China, she is viewed not only as the main point of contact for Europe, but, crucially, also as a reliable interlocutor — an antithesis of the mercurial Trump.

Devoting her weekly podcast to her visit, Merkel stressed that Beijing and Berlin “are both committed to the rules of the WTO” (World Trade Organization) and want to “strengthen multilateralism.”

But she also underlined that she will press home Germany’s longstanding quest for reciprocity in market access as well as the respect of intellectual property.

Ahead of her visit, Beijing fired off a rare salvo of criticism.

China’s envoy to Germany, Shi Mingde, pointed to a “protectionist trend in Germany,” as he complained about toughened rules protecting German companies from foreign takeovers.

Only 0.3 percent of foreign investors in Germany stem from China while German firms have put in €80 billion in the Asian giant over the last three decades, he told Stuttgarter Nachrichten.

“Economic exchange cannot work as a one-way street,” he warned.

Meanwhile, looming over the battle on the trade front is another equally thorny issue — the historic Iran nuclear deal, which risks falling apart after Trump pulled the US out.

Tehran has demanded that Europe keeps the deal going by continuing economic cooperation, but the US has warned European firms of sanctions if they fail to pull out of Iran.

Merkel “hopes that China can help save the atomic deal that the US has unilaterally ditched,” said Die Welt daily.

“Because only the giant emerging economy can buy enough raw materials from Iran to give the Mullah regime an incentive to at least officially continue to not build a nuclear weapon.”