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

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

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.”


UAE’s Mubadala Petroleum signs Red Sea oil exploration deal with Egypt

The agreement, signed by Egyptian Minister of Petroleum and Mineral Resources Tarek El-Molla, allows the company to explore in a 3,084 square kilometer area of the Red Sea. (Shutterstock/File Photo)
The agreement, signed by Egyptian Minister of Petroleum and Mineral Resources Tarek El-Molla, allows the company to explore in a 3,084 square kilometer area of the Red Sea. (Shutterstock/File Photo)
Updated 23 January 2021

UAE’s Mubadala Petroleum signs Red Sea oil exploration deal with Egypt

The agreement, signed by Egyptian Minister of Petroleum and Mineral Resources Tarek El-Molla, allows the company to explore in a 3,084 square kilometer area of the Red Sea. (Shutterstock/File Photo)
  • It will own 27 percent of the stake as part of the agreement, while Shell will own 63 percent

CAIRO: The UAE’s Mubadala Petroleum Company has signed an agreement with Egypt to explore for oil and gas in the Red Sea.

The agreement, signed by Egyptian Minister of Petroleum and Mineral Resources Tarek El-Molla, allows the company to explore in a 3,084 square kilometer area of the Red Sea and was a result of a bidding round in 2019.

It will own 27 percent of the stake as part of the agreement, while Shell will own 63 percent. Egypt’s Tharwa Petroleum Company owns the remaining 10 percent.

The agreement refers to an area known as Sector 4, located in the north of the Red Sea in an area adjacent to the Gulf of Suez Basin, which is rich in natural resources. 

Parties will commit to conducting exploration studies in this sector and collecting seismic data for the area, using three-dimensional techniques, during the first three years of the exploration phase.

“The addition of Sector 4 in the Red Sea represents a new extension of our operations in Egypt, while providing a valuable opportunity to expand our activities, and by working with a strategic partner such as Shell,” said Mubadala Petroleum CEO Bakheet Al Katheeri. “The search and exploration operations in this sector, if successful, will support our strategy of extracting and manufacturing hydrocarbons, in order to contribute to supporting the stability and expansion of the Egyptian market, while providing growth opportunities for our operations in the country.”

Mubadala Petroleum owns a 10 percent stake in the offshore Shurooq gas field concession that includes the Zohr natural gas field, in addition to 20 percent in the concession area of Noor Gas Company. Both are located in the Mediterranean Sea off the coast of Egypt.