RIYADH, 22 November 2005 — The Saudi Arabian Capital Market Authority (CMA), the newly established regulator of the stock exchange and capital markets in the Kingdom, has given approval to HSBC and The Saudi British Bank (SABB) to establish the first full-service, independent investment bank in the Kingdom licensed under the new Capital Market Law.

The HSBC, through a wholly owned subsidiary, will hold 60 percent of the equity in the new company and SABB, in which HSBC has a 40 percent shareholding, will hold the remaining 40 percent.

The joint venture, to be known as HSBC Saudi Arabia Limited, will be established as a limited liability company headquartered in Riyadh, with a share capital of SR50 million ($13.33 million).

Its formation is subject to obtaining an investment license from the Saudi Arabian General Investment Authority and a commercial registration from the Ministry of Commerce and Industry.

HSBC Saudi Arabia Limited will provide corporate finance and asset management advisory services to corporations and institutions in Saudi Arabia as well as investment advisory services to individual investors.

In addition, the new company will manage SABB’s domestic and international equity brokerage and security service businesses.

Its corporate finance units will provide a wide range of services related to the issuance of initial public offerings, rights issues, private placements and Islamic and conventional debt securities. The joint venture will also provide project finance, privatization, and merger and acquisition advice to a broad range of clients.

Stephen Green, group chief executive of HSBC Holdings PLC, said: “This year marks the 55th year of HSBC’s continuous presence in the Kingdom of Saudi Arabia, first through The British Bank of the Middle East and then through The Saudi British Bank. We are optimistic about the long-term prospects for growth in the Saudi Arabian economy and look forward to providing investment banking and asset management expertise and products to the local market.”

Welcoming the development, Abdullah Al-Hugail, chairman of The Saudi British Bank, said: “We recognize and appreciate the significant value added by HSBC to the capabilities of The Saudi British Bank. We are pleased to be able to bring to our clients in Saudi Arabia an even broader level of global expertise through the establishment of this new investment banking vehicle.”

Later, in an exclusive interview with Arab News, Timothy Gray, managing director and head of Investment Banking-Saudi Arabia, and Zaid A. Al-Gwaiz, deputy managing director, Investment Banking at SABB, said HSBC would manage the flotation of the Kingdom’s first corporate bond to be issued by the Saudi Basic Industries Corp. (SABIC).

According to SABIC Vice-President for Petrochemicals Coordination Homood Al-Tuwaijri, the bond, worth up to SR1 billion ($267 million) would be issued either by the end of this year or early next year. “There is considerable appetite in the domestic market for SABIC assets,” he said, adding that it was intended to help finance its global expansion.

On the question of the bonds market, Gray said SABB’s $600 million five-year Eurobond issue was well received by the market, since it was the first Eurobond by a Saudi bank.

The managing director said HSBC was also positioning itself strongly in providing corporate finance and advisory services. “We have been receiving a lot of inquiries from family owned enterprises that want to go public. However, we want to make sure that they fulfill the criteria required for floating IPOs (Initial Public Offerings), since we have a social responsibility as well.”

Pointing out that there was a growing market for IPOs, BMG’s Chief Executive Officer Basil Al-Ghalayini said both BMG and the Malaz Group were the first to receive a license from CMA for advising and arranging IPOs, mergers and acquisitions as well as for raising the capital of listed companies.

Asked about the Islamic bonds market, Al-Gwaiz said it was picking up fast. “Our Shariah-compliant products constitute 70 percent of our investment portfolio, with the conventional products making up the rest,” he said: “One Islamic fund alone is worth over SR10 billion.”