Citi’s Middle East banking business is no joking matter

Citi’s Middle East banking business is no joking matter
Illustration by Luis Grañena
Updated 07 October 2018

Citi’s Middle East banking business is no joking matter

Citi’s Middle East banking business is no joking matter
  • Last year, Citi reopened in Saudi Arabia after a 13-year absence, with a license from the Capital Market Authority
  • Citi is now advising the Saudi authorities on some aspects of privatization, and sees health care, housing, airports, and utilities among the first to be sold off

DUBAI: At around 6 p.m. last Tuesday, Atiq Rehman was racking his brains for a joke.

The CEO of the Middle East and Africa for Citigroup, the giant American banking business, was delivering closing remarks after a one-day summit of media and non-governmental organizations (NGOs) in Dubai. The summit had encompassed virtually every aspect of the business of a global financial business, from trade wars to fintech, but humor had been in short supply.

Rehman never found the appropriate joke, but instead delivered a masterful tour d’horizon of Citi’s growing business in the region. Having been with the bank since he graduated in 1984, mostly in the emerging markets of the Arab and African world, it is a subject he knows better than most.

Saudi Arabia was top of his list of priorities. “It is the biggest economy in the region and you cannot say you’re a global bank unless you service economies like Saudi Arabia,” he said.

Last year, Citi reopened in the Kingdom after a 13-year absence, with a license from the Capital Market Authority, mainly for investment banking business, and could now look to add a full banking license from the Saudi Arabia Monetary Authority, which would allow it to offer other commercial banking services.

Citi never really went away from its corporate clients in the Kingdom during those 13 years, continuing to provide external banking facilities to clients such as SABIC, but the reform program under Vision 2030 dramatically increased the attraction of a physical return to Saudi Arabia. Rehman believes the pace of transformation will continue, against a background of rising oil prices.

“The price of commodities will always fluctuate for a whole range of factors, and I never feel confident about the idea that oil prices will only go one way. Long term, you have to iron out some  of the variations. But Vision 2030 is a grand strategy, and part of the rationale behind it is to even out the effects of oil price variations,” he said.

He thinks different parts of the transformation program may proceed at different speeds. “My feeling is that a lot of very good work has already been done, especially with the changes on the social side. In some ways, many of the harder policy options — in social and cultural things — have already been tackled. You have to give Saudi Arabia a lot of credit for the changes it has achieved here.

“But in the short term on the economic aspects, things may go up and down, slow down and speed up. You have to have the flexibility to adapt to changes. Oil at $80-90 a barrel is helpful for the Saudi economy, but I do not feel that will change the impetus for economic change in the long term. The privatization program is a big thing of course, but it is a pretty straightforward proposition,” he added.

Citi is advising the Saudi authorities on some aspects of privatization, and sees health care, housing, airports, and utilities among the first to be sold off.

But much of Citi’s work in the Kingdom since its return has been on the financial and capital markets business. Most recently, it was among the group of international banks that organized an $11 billion bond sale, following involvement in several of the previous record-setting issues.

“We think it is very important to have in place a proper debt management office and capital markets program. The global investment community expects and appreciates that, and we’ve been instrumental in helping Saudi Arabia achieve the profile it has in international capital markets.

“That kind of profile will help a lot too in the equity markets, which have been very strong in Saudi over the past year. International investors have taken notice of the reforms of Tadawul and CMA, and have supported them,” he added.

Rehman was speaking before Saudi Crown Prince Mohammed bin Salman confirmed in an interview with Bloomberg that the initial public offering (IPO) of Saudi Aramco, the biggest oil company in the world, would go ahead by late 2020 or early 2021, but the Citi boss stressed the need for flexibility in such important corporate events.

“Things in the financial world move around, plans and timings change. Even for the smallest companies, things like IPOs take time. We understand the need to get it right on something as important as Aramco.




Illustration by Luis Grañena

“Saudi policymakers can afford to be more expansive in their budgeting with oil where it is now. Government spending continues to play a very important role on economic strategy. But the private sector has seen some very bold decisions lately, and that’s increasingly important,” he added.

He believes there will ways be an important role for governments to play in stimulating regional economies, and cites the actions of the Egyptian government when it headed off a currency crisis as an example of good top-down economic management.

But regardless of the new-found emphasis on Saudi Arabia, the UAE will continue to be the regional hub for Citi’s business, and an increasingly important revenue generator. Rehman believes the Emirates stands to gain significantly from new US tax reforms, which will allow American corporations to elect to pay tax in the jurisdiction where they are based, and this could add to the attraction of the UAE and its free zones, where zero-rated tax applies.

“For big US corporations it would make increasing sense to have the Dubai International Financial Center, or the Jebel Ali Free Zone, as your regional base, because there is no tax payable there,” he said.

Citi is looking to increasingly book its business on loans and other business in the UAE. “We are focused on what we can do within the UAE and very focused on what we can do from the UAE,” he said. “We want to grow our business here and make it into a regional offshore booking center for a lot of our loans,” he said.

The event in Dubai was an opportunity to explain Citi strategy in the Middle East and Africa to a group of regional media representatives, but also to engage the NGOs who are an increasingly important constituency for the American bank, via its autonomous unit, the Citi Foundation.

Issues such as gender equality, climate change and governance have become more controversial in the Trump presidency, but Rehman said Citi would continue to place high priority on corporate social governance (CSR).

“It is already engrained in the company’s business model. Of course, there has to be a commercial objective in everything, but CSR is a crucial factor for us. The firm believes in doing things in a way that helps solve wider problems and issues,” he said.

He reeled off examples of how Citi in the wider region is helping to tackle these issues, from its arrangement with the UN to transport the cash used to pay peace-keeping soldiers in Sudan and the Democratic Republic of Congo, through to its commitment to the dollar-clearing system, which some banks have given up for regulatory reasons.

There is a dark cloud on the regional horizon, in the form of the growing potential for cybercrime. Citi recently hired a former agent from the Federal Bureau of Investigation to head up its cyber capabilities, but Rehman acknowledged it is still an issue.

“Maybe the biggest thing I’m concerned about at the moment is the possibility of cyberattack. It is a real risk and we have not seen the full implications of it,” he said. Maybe that worry is the reason he failed to find the appropriate joke on the night.


WEF leader urges countries to ‘pay close attention’ to digital currency

WEF leader urges countries to ‘pay close attention’ to digital currency
Updated 34 min 31 sec ago

WEF leader urges countries to ‘pay close attention’ to digital currency

WEF leader urges countries to ‘pay close attention’ to digital currency
  • The Asian superpower recently announced it will allow foreign visitors to use digital yuan in the upcoming Winter Olympics

DUBAI: Digital currency is going to play a big role in the global economy, a World Economic Forum (WEF) committee leader said, and nations need to pay attention to its unprecedented progress.

“Somebody needs to be paying close attention to this space, and assessing on a weekly basis, what the national policy ought to be regarding digital currencies,” Sheila Warren, deputy head of the Centre for the Fourth Industrial Revolution (C4IR) committee of WEF, told Arab News.

Digital currency will continue to evolve, she said, adding some nations have already started investigating its effect on their own economies.

“We’re going to see a variety of offerings in the digital currency space — central bank digital currency, stable coin issuances, and cryptocurrencies including Bitcoin,” Warren explained.

According to Atlantic Council, which tracks central banks’ participation in the space, 81 countries have already explored a digital currency with China leading the pack.

The Asian superpower recently announced it will allow foreign visitors to use digital yuan in the upcoming Winter Olympics.

Other major central banks in the race are the US Federal Reserve, the European Central Bank, the Bank of Japan, and the Bank of England.

In the Gulf, Saudi Arabia and the UAE previously said they were working jointly on a digital currency plan — they called the initiative “Project Aber.”

The two countries aim to develop a cross-border payment system that will reduce transfer times and costs between banks.

Although every nation doesn’t necessarily have to “immediately jump in,” Warren said it is important to watch the evolution of the industry.

“If you're not doing that, you're going to be stuck, I think, with whatever the world decides, the direction of travel is going to be, and not have enough opportunity to help shape that,” she explained.

On decentralized cryptocurrencies, including bitcoin, Warren said it will continue to have a huge role in the global economy as well.

“We’re going to see an increase in market cap, an increase in market share of the suite of digital currencies,” she said.

The private sector will take advantage of this by developing some of a blockchain or distributed ledger, she added.


Tunisians hope for better times ahead

Tunisians hope for better times ahead
Updated 48 min 26 sec ago

Tunisians hope for better times ahead

Tunisians hope for better times ahead
  • The proceeds from selling the plastic, combined with limited financial assistance from the government

TUNIS: As day breaks over Tunis, Jamila Ghuili takes her two small children out into the streets to scavenge in waste bins for plastic bottles that she sells to buy food for her family.
Abandoned by her husband, the single mother lives in a poor part of Omrane Superieur, a neighborhood of the capital where Tunisia’s economic malaise is acutely felt.
“Everything has become expensive,” said Ghuili, as her children played next to her.
Exacerbated by the repercussions of the COVID-19 pandemic, economic grievances have fueled discontent in Tunisia, leading to protests that encouraged President Kais Saied to remove the prime minister and assume governing authority last month.
Ghuili, 55, gathers a few kilograms of dirt-covered plastic each day, foraged from heaps of garbage dumped at the roadside.
The proceeds from selling the plastic, combined with limited financial assistance from the government, amount to 190 Tunisian dinars ($69) a month, around half her monthly rent.
Hamza Ayari, who buys the bottles and re-sells them to factories, says many people are doing the same. “They don’t have any other job, they are poor people,” he said.
Desperate for better lives, some of Omrane Superieur’s residents are hopeful about Saied’s move.
“I salute the people who voted for him, he is a good person,” said Fakhreddine Wannas, 56, a resident. “I hope he can take us out of the dark and into the light.”
It echoes sentiment expressed by other Tunisians who are fed up with political bickering and want to see an improvement in the economy — which shrank by 8.8 percent last year — and more effective action against COVID-19.
Saied, who was elected in 2019, says he will not become a dictator and that the actions he took on July 25, including the 30-day suspension of parliament, were constitutional. He has yet to set out next steps.
Soumaya, who paints henna tattoos for a living, expressed relief about the situation, saying that for a long time Tunisians did not know where they were heading. “Now we are all happy,” said Soumaya, as she painted a child’s hand.


Bitcoin falls as investors criticize US tax plan

Bitcoin falls as investors criticize US tax plan
Updated 56 min 21 sec ago

Bitcoin falls as investors criticize US tax plan

Bitcoin falls as investors criticize US tax plan
  • Binance has announced that it will discontinue its derivatives and futures products in Germany, Italy

DUBAI: Bitcoin traded lower on Tuesday, falling by 2.81 percent to $38,516.96 at 5:01 p.m. Riyadh time, while Ether was down 4.03 percent to $2,517.24, data from CoinDesk showed.

The decline comes amid reports of cryptocurrency organizations criticizing the US government’s plan to tax the industry.

The US Congress earlier said it has plans to tax various actors in the crypto financial system to help pay for infrastructure expenditures. It will do this by classifying these parties as intermediaries under the Internal Revenue Code.

The Monetary Authority of Singapore has approved Australia’s Independent Reserve to operate digital payment services.

The reserve, which is one of Australia’s biggest cryptocurrency exchanges, said it was one of the first digital asset service providers to obtain initial approval for a license from a major payment institution in Singapore.

In South Korea, 11 cryptocurrency exchanges will be shut down by a top financial regulator, local media reported.

The regulator alleged their involvement in fraudulent bank accounts, and said they have yet to comply with state regulations.

Binance has announced that it will discontinue its derivatives and futures products in Germany, Italy, and the Netherlands — a likely result of the regulatory crackdown government around the world imposed on the company, CoinDesk reported.


Saudi stock market index hits 14-year high

The Tadawul All-Share Index (TASI) on Tuesday reached its highest level since January 2008 with 11,209 points. (Shutterstock/File Photo)
The Tadawul All-Share Index (TASI) on Tuesday reached its highest level since January 2008 with 11,209 points. (Shutterstock/File Photo)
Updated 03 August 2021

Saudi stock market index hits 14-year high

The Tadawul All-Share Index (TASI) on Tuesday reached its highest level since January 2008 with 11,209 points. (Shutterstock/File Photo)
  • Fitch Ratings also recently confirmed the long-term rating of Saudi Arabia at “A” with a change in the future outlook to stable

JEDDAH/RIYADH: The Tadawul All-Share Index (TASI) on Tuesday reached its highest level since January 2008 with 11,209 points.

The market index has witnessed a gradual rise since the beginning of the year, reaching about 2,500 points or 28.7 percent. The optimism in the market is also attributed to the rising oil prices following the easing of global COVID-19 restrictions and OPEC+ deal.

“The Tadawul index is benefitting today from many factors including the increase in the number of listed companies over the past 5 years and the rising investor confidence as the Kingdom is recovering from the pandemic,” said Faiz Alhomrani, a financial market analyst told Arab News. “The market today also benefited from the strong results of the banking and petrochemical sectors.”

Alhomrani also said that the increase in the oil prices also supported the markets as it is an indicator of increased government spending, adding that Tadawul might hit new highs around 13-14,000 points but this might take two years.

Saudi Finance Minister Mohammed Al-Jadaan recently said the coronavirus disease (COVID-19) pandemic in the Kingdom is very much under control.

Fitch Ratings also recently confirmed the long-term rating of Saudi Arabia at “A” with a change in the future outlook to stable, and Capital Economics raised its forecast for the growth of the Saudi economy from 2.2 percent to 4.8 percent during the current year, and from 4.1 percent to 6.3 percent in 2022. 

Tadawul had recorded its highest level on Sept. 9, 2014 session at 11,160 points, and the market's rise at that time came after the approval of the Saudi Cabinet to open the stock market to qualified foreign financial institutions, according to Argaam.


Dubai-based company setup firm expands operations in Saudi Arabia

Dubai-based company setup firm expands operations in Saudi Arabia
Updated 03 August 2021

Dubai-based company setup firm expands operations in Saudi Arabia

Dubai-based company setup firm expands operations in Saudi Arabia

RIYADH: Pro Partner Group, a Dubai-based company specializing in company formations, has expanded its operations in Saudi Arabia.

It was established in 2014 and has offices in Abu Dhabi, Dubai, Oman, and Qatar. The company helps new entrants into the market to manage the legal requirements, arrange employment visas and other paperwork.

The company aims to take advantage of the Riyadh Strategy 2030 announced by Crown Prince Mohammed bin Salman in January. 

“Companies both large and small are already looking at the benefits of setting up a business in the Kingdom and taking advantage of commercial opportunities that are potentially more lucrative than in neighboring markets,” said Jane Ashford, founder, and chair of PRO Partner Group.

Under the ambitious Riyadh strategy, the Saudi government wants to attract up to 500 international companies to set up their regional bases in the city, creating around 35,000 new jobs for Saudi locals and doubling the capital’s population. The strategy aims to invest up to SR70 billion ($18.67 billion) in the national economy by the end of the decade and it is already attracting international players eager to expand into the Kingdom.

“I see Saudi Arabia as our biggest opportunity of the region by far. And I think in the next two to three years, our business in Saudi Arabia should eclipse our UAE business and Qatar business,” said Nazar Musa, CEO of Pro Partner Group.

“This year, we are 60 percent more than Q1 of last year, and Q1 of last year was 30 more than the year before,” Musa said of the company’s recent growth.

Musa said the recent announcements by the Saudi government had spurred interest among companies to expand their operations to the Kingdom. “Obviously, there are businesses that have been there for years and years, but I’m talking about the kinds of companies that are starting to speak to us for the first time about opportunities in the Kingdom,” he said.

The Global Entrepreneurship Monitor (GEM) 2020/2021 report, which surveyed adults aged between 18 and 64, found that 90.5 percent of those surveyed in Saudi Arabia believed there were good opportunities to start a business in their area, ranking it first in the world among 43 countries surveyed.