Saudi central bank injects $13.333bn to support liquidity of banking system

SAMA’s new stimulus package is an extension to initiatives taken by the central bank to ensure the stability of the system amid the coronavirus crisis. (Shutterstock)
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Updated 02 June 2020

Saudi central bank injects $13.333bn to support liquidity of banking system

  • Latest cash boosts from Saudi Arabian Monetary Authority follow March fund to support SMEs, employment

RIYADH: The Saudi Arabian Monetary Authority (SAMA) is set to inject $13.333 billion in the banking system to enhance the liquidity in the sector, the Saudi central bank said.

The stimulus package aims to enhance its liquidity and enable banks to continue providing credit facilities to their clients, SAMA added.

The new support follows SAMA’s decision in March to provide SR50 billion for banks to provide debts and delay overdue loan installments for small and medium-sized businesses (SMEs) to help them maintain jobs.

SAMA added that the cash will help to continue “supporting and financing the private sector through modifying or restructuring their finances without additional fees, and supporting plans to maintain employment levels of the private sector.”

Dr. Ahmed Alkholifey, governor of SAMA, told Al-Arabiya that the funds will come in the form of one-year no-interest deposits in all Saudi banks.

Alkholifey added that the SAMA move aims to enhance liquidity in the banking sector as well as reducing the burden on some banks that delayed payments of companies and weren’t covered by the March support package, and those banks with high exposure to enterprises in Makkah or Madinah.

He added that SAMA is going to activate the open market operation for all banks during this month to enable them to get the required liquidity levels from SAMA.

“We are monitoring the liquidity levels on a weekly basis since the (coronavirus) crisis started, we care about both the liquidity index and the quality of debts, regarding the liquidity index we monitor the debt-to-deposits where there is a slight increase, we set it to not exceed 90 percent,” he said, adding: “Three banks have exceeded that percentage slightly, this might be one of the indicators of pressure on liquidity but in reality there is no big pressure.”

He added that injecting liquidity aims to give more confidence to the banking sector and to enable them to give more loans after reopening the business activities.

Alkholifey added that since SAMA announced providing supporting packages for SMEs in March, more than 65,000 contracts have been signed between SMEs and banks to benefit from the supporting package.

Talat Hafiz, secretary-general of the Media and Banking Awareness Committee for Saudi banks, said that SAMA’s new stimulus package is an extension to initiatives taken by the central bank to ensure the stability of the system amid the coronavirus crisis and its economic impacts.

“It’s one of SAMA’s monetary tools that it uses to ensure there is enough liquidity in the banking sector to enable banks to carry out their duty of financing the private sector in general and the SMEs in particular,” he told Arab News.

“The banking sector shows very healthy financial indicators, as the first quarter of this year has shown the Capital Adequacy Ratio of the banking sector recording 18.6 percent, which is much higher than Basel requirement. 

“The total assets of the banks has grown to 14 percent in the same period compared with last year. Loans and credit facilities extended to the private sector have grown by 12 percent.”


Singapore Airlines drops ‘flights to nowhere’ after outcry

Updated 29 September 2020

Singapore Airlines drops ‘flights to nowhere’ after outcry

  • Several carriers have been offering short flights that start and end at the same airport to raise cash

SINGAPORE: Singapore Airlines said Tuesday it had scrapped plans for “flights to nowhere” aimed at boosting its coronavirus-hit finances after an outcry over the environmental impact.
With the aviation industry in deep crisis, several carriers – including in Australia, Japan and Taiwan – have been offering short flights that start and end at the same airport to raise cash.
They are designed for travel-starved people keen to fly at a time of virus-related restrictions, and have proved surprisingly popular.
But Singapore’s flag carrier – which has grounded nearly all its planes and cut thousands of jobs – said it had ditched the idea following a review.
The carrier has come up with alternative ideas to raise revenue, including offering customers tours of aircraft and offering them the chance to dine inside an Airbus A380, the world’s biggest commercial airliner.
Environmental activists had voiced opposition to Singapore Airlines launching “flights to nowhere,” with group SG Climate Rally saying they would encourage “carbon-intensive travel for no good reason.”
“We believe air travel has always caused environmental harm, and it is now an opportune moment for us to think seriously about transitions instead of yearning to return to a destructive status quo.”
The airline said earlier this month it was cutting about 4,300 jobs, or 20 percent of its workforce, the latest carrier to make massive layoffs.
The International Air Transport Association estimates that airlines operating in the Asia-Pacific region stand to lose a combined $27.8 billion this year.
The group also forecasts that global air traffic is unlikely to return to pre-coronavirus levels until at least 2024.