US government: Silicon Valley Bank clients will get funds

US government: Silicon Valley Bank clients will get funds
A Silicon Valley Bank logo is seen through broken glass in this illustration taken March 10, 2023. (REUTERS Illustration)
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Updated 13 March 2023
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US government: Silicon Valley Bank clients will get funds

US government: Silicon Valley Bank clients will get funds
  • Regulators closed the bank on Friday when depositors rushed to withdraw their funds all at once
  • Execs feared that if the failed bank is not rescued, customers would make runs on other financial institutions in the coming days

NEW YORK: The US government took emergency steps Sunday in an attempt to prevent more instability among banks after the historic failure of Silicon Valley Bank, and assured clients of the failed financial institution that they would be able to recover all of their money quickly.
The announcement came amid fears that the factors that caused the Santa Clara, California-based bank could spread, and only hours before trading began in Asia. Regulators had worked all weekend to try and come up with a buyer for the bank or broker another intervention, and as another bank, Signature Bank, was shuttered. The Treasury Department, Federal Reserve and FDIC said Sunday that all Silicon Valley Bank clients will be protected and have access to their funds and announced steps designed to protect the bank’s customers and prevent more bank runs. “This step will ensure that the US banking system continues to perform its vital roles of protecting deposits and providing access to credit to households and businesses in a manner that promotes strong and sustainable economic growth,” the agencies said in a joint statement.
Regulators had to rush to close Silicon Valley Bank, a financial institution with more than $200 billion in assets, on Friday when it experienced a traditional run on the bank where depositors rushed to withdraw their funds all at once. It is the second-largest bank failure in US history, behind only the 2008 failure of Washington Mutual.
Some prominent Silicon Valley executives feared that if Washington didn’t rescue the failed bank, customers would make runs on other financial institutions in the coming days. Stock prices plunged over the last few days at other banks that cater to technology companies, including First Republic Bank and PacWest Bank.
Among the bank’s customers are a range of companies from California’s wine industry, where many wineries rely on Silicon Valley Bank for loans, and technology startups devoted to combating climate change.
Sunrun, which sells and leases solar energy systems, had less than $80 million of cash deposits with Silicon Valley Bank as of Friday and expects to have more information on expected recovery in the coming week, the company said in a statement.
Stitchfix, the popular clothing retail website, disclosed in a recent quarterly report that it had a credit line of up to $100 million with Silicon Valley Bank and other lenders.
The Federal Deposit Insurance Corporation insures deposits up to $250,000, but many of the companies and wealthy people who used the bank — known for its relationships with technology startups and venture capital — had more than that amount in their account. There are fears that some workers across the country won’t receive their paychecks.
No plan had been announced on Sunday afternoon with hours to go until Asian markets opened. There were widespread hopes that Silicon Valley Bank would be acquired, but it was unclear if a buyer would emerge.
Federal officials set a deadline of 2 p.m. for potential buyers to submit bids in a government auction for the bank, according to a person who familiar with the matter. The person requested anonymity to talk about private conversations. Bloomberg was first to report the auction.
Yellen, in her Sunday morning interview with CBS’ “Face the Nation,” provided few details on the government’s next steps. But she emphasized that the situation was much different from the financial crisis almost 15 years ago, which led to bank bailouts to protect the industry.
“We’re not going to do that again,” she said. “But we are concerned about depositors, and we’re focused on trying to meet their needs.”
With Wall Street rattled, Yellen tried to reassure Americans that there will be no domino effect after the collapse of Silicon Valley Bank.
“The American banking system is really safe and well capitalized,” she said. “It’s resilient.”
Silicon Valley Bank, based in Santa Clara, California, is the nation’s 16th-largest bank. It was the second biggest bank failure in US history after the collapse of Washington Mutual in 2008. The bank served mostly technology workers and venture capital-backed companies, including some of the industry’s best-known brands.
Silicon Valley Bank began its slide into insolvency when its customers, largely technology companies that needed cash as they struggled to get financing, started withdrawing their deposits. The bank had to sell bonds at a loss to cover the withdrawals, leading to the largest failure of a US financial institution since the height of the financial crisis.
Yellen described rising interest rates, which have been increased by the Federal Reserve to combat inflation, as the core problem for Silicon Valley Bank. Many of its assets, such as bonds or mortgage-backed securities, lost market value as rates climbed.
“The problems with the tech sector aren’t at the heart of the problems at this bank,” she said.
Yellen said she expected regulators to consider “a wide range of available options,” including the acquisition of Silicon Valley Bank by another institution. No buyer has been announced.
Sheila Bair, who was the FDIC chair during the 2008 financial crisis, recalled that with almost all the bank failures during that time, “we sold a failed bank to a healthy bank. And usually, the healthy acquirer would also cover the uninsured because they wanted the franchise value of those large depositors so optimally, that’s the best outcome.” But with Silicon Valley Bank, she told NBC’s “Meet the Press,” “this was a liquidity failure, it was a bank run, so they didn’t have time to prepare to market the bank. So they’re having to do that now, and playing catch-up.”
Regulators seized the bank’s assets on Friday. Deposits that are insured by the federal government are supposed to be available by Monday morning.
“I’ve been working all weekend with our banking regulators to design appropriate policies to address this situation,” Yellen said. “I can’t really provide further details at this time.”
House Speaker Kevin McCarthy, R-Calif., told Fox News Channel’s “Sunday Morning Futures” that he hoped the administration would announce the next steps as soon as Sunday.
“They do have the tools to handle the current situation, they do know the seriousness of this and they are working to try to come forward with some announcement before the markets open,” he said.
McCarthy also expressed hope that Silicon Valley Bank would be purchased.
“I think that would be the best outcome to move forward and cool the markets and let people understand that we can move forward in the right manner,” he said.
Democratic Rep. Ro Khanna, whose district includes the city where the bank has its headquarters, said it was imperative that the government guarantee all depositors and that they “have full access to their accounts Monday morning.”
“Time is ticking,” he told CBS.
Sen. Mark Warner, D-Virginia, said in an interview with ABC News’ “This Week” that he was concerned that the bank’s collapse could prompt nervous people to transfer money from other regional banks to larger institutions.
“We don’t want further consolidation,” he said.
Warner suggested there would be a “moral hazard” in reimbursing depositors in excess of the $250,000 limit and said an acquisition would be the best next step.
“I’m more optimistic this morning than I was yesterday afternoon at this time,” he said. “But, again, we will see how this plays out during the rest of the day.”
He added: “What we’ve got to focus on right now is how do we make sure there’s not contagion.”
President Joe Biden and Gov. Gavin Newsom spoke about “efforts to address the situation” on Saturday, although the White House did not provide additional details on next steps.
Newsom said the goal was to “stabilize the situation as quickly as possible, to protect jobs, people’s livelihoods, and the entire innovation ecosystem that has served as a tent pole for our economy.”
 


Saudi-Portuguese committee seeks to bolster economic ties

Saudi-Portuguese committee seeks to bolster economic ties
Updated 58 min 27 sec ago
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Saudi-Portuguese committee seeks to bolster economic ties

Saudi-Portuguese committee seeks to bolster economic ties

RIYADH: Economic relations between Saudi Arabia and Portugal are on track to further strengthen as a top-level delegation heads to Lisbon for a meeting to enhance cooperation between the two countries.

Saudi Minister of Economy and Planning Faisal Al-Ibrahim will lead the delegation at the sixth session of the Saudi-Portuguese Joint Committee which begins on Monday, the Saudi Press Agency reported.

The two-day meeting will review investment opportunities between the two countries and explore venues for further collaboration across different sectors.

Al-Ibrahim is scheduled to deliver both the opening and closing speeches at the meeting alongside Portuguese Minister of Economy and Maritime Affairs Antonio Costa Silva.

The Saudi minister is also expected to deliver the opening speech at the Saudi-Portuguese Investment Forum.

He will also hold several meetings with senior government officials in Portugal and sign agreements aimed at boosting economic cooperation.

Saudi delegation includes representatives of different ministries and top officials of various government agencies.

In August, Al-Ibrahim met in Riyadh with the Ambassador of Portugal to the Kingdom of Saudi Arabia, Nuno Mathias, SPA reported at the time. They both discussed ways to enhance cooperation.


Saudia rebranding first step toward new customer experience

Saudia rebranding first step toward new customer experience
Updated 01 October 2023
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Saudia rebranding first step toward new customer experience

Saudia rebranding first step toward new customer experience
  • Top official says it is more than a change in logo or colors

RIYADH: The unveiling of a new brand identity for Saudi Arabian Airlines is more than a change in its appearance, as according to a top official it is but a part of a huge transformation in the company’s approach in line with the ongoing digital transformation.

Khaled Tash, head of marketing at Saudia, told Arab News on Sunday the new look represented the airline’s commitment to digital advancement and an array of new services and products in the pipeline.

He said the rebranding signifies the company’s embrace of the developing tech industry, reflecting the Kingdom’s broader ambitions.

The official said: “This is not about changing our logo or changing our colors.” It is, he added, more about improving our services and introducing new products.

“We are very keen to accelerate the transition…the overall reaction from the market” has been overwhelming, Tash said.

Elaborating on how the update reinforces the airline’s digital transformation, Tash noted that Saudia stands out as one of the pioneering airlines in Europe, the Middle East, and Africa to integrate artificial intelligence into its customer experience.

“The Travel Companion is an AI-driven personal aide. When users access the Saudia app, it intuitively recognizes them without requiring manual data input and promptly aids with all travel-related queries,” elaborated Tash.

Highlighting its capabilities, he mentioned that users can ask Saudia’s travel companion bot for holiday recommendations, which will engage in an interactive dialogue to understand preferences before offering tailored suggestions.

Additionally, users can seamlessly book their flights directly within the chat interface when conversing with the travel companion, eliminating the need to navigate away from the conversation.

The AI-driven bot is slated for launch by the end of this year, coinciding with an enhanced version of the airline’s application.

“Digital transformation is not just a buzzword that we use, we aim to improve the customer experience using new innovations,” Tash stated.

He elaborated that, guided by that motto, the company has pinpointed 260 features and services for introduction or enhancement if they already exist.

The airline has also launched a VIP meet-and-greet service. Tash expects this addition to boost revenue from booking services by 10 percent.

In alignment with Arab culture, the airline has introduced an option for female passengers to request seating next to other female passengers on specific, long-duration flights.

Tash said the unprecedented growth in the Kingdom’s tourism sector is also proving to be fruitful for the airline and it is part of the ongoing transformation. He specifically mentioned the fact that Saudia is the first airline to begin operations to and from the Red Sea International Airport.

The marketing head also revealed that the airline has ambitious goals to more than triple its passenger count over the next seven years.

Clarifying the shift in Saudia’s vision, Tash mentioned that historically, the airline’s objective was to connect the Kingdom’s citizens to the world. However, the current goal emphasizes bringing the world to Saudi Arabia.


Closing bell: Saudi main index closes lower at 11,040  

Closing bell: Saudi main index closes lower at 11,040  
Updated 01 October 2023
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Closing bell: Saudi main index closes lower at 11,040  

Closing bell: Saudi main index closes lower at 11,040  

RIYADH: Saudi Arabia’s Tadawul All Share Index closed lower on Sunday, slipping 15.79 points or 0.14 percent to finish at 11,040.17. The benchmark index saw a total trading turnover of SR4.08 billion ($1.08 billion) with 79 listed stocks advancing and 135 retreating. 

In contrast, the Kingdom’s parallel market Nomu inched up 8.33 points, or 0.04 percent, to close at 22,698.64, with 24 listed stocks advancing and 30 retreating. 

The MSCI Tadawul Index declined 0.55 points, or 0.04 percent, closing at 1,415.12. 

The best-performing stock of the day was Middle East Healthcare Co., with its share price surging 8.35 percent to SR59.70. Other top performers included Electrical Industries Co. and Development Works Food Co., with their share prices soaring 5.37 percent and 4.90 percent, respectively, to stand at SR2.16 and SR111.40. 

Development Works Food Co. and the Mediterranean and Gulf Insurance and Reinsurance Co. were also among the top performers of the day. 

The worst performer was Raydan Food Co., as its share price dropped 3.80 percent to SR26.60. Other decliners included National Agricultural Development Co. and Naseej International Trading Co., with their share prices dropping 3.05 percent and 2.63 percent, respectively, to SR46.05 and SR44.50. 

Fawaz Abdulaziz Alhokair Co. and Thimar Development Holding Co. were also among the poor performers of the day. 

Meanwhile, Alqemam for Computer Systems Co. was the top performer on Nomu, while Academy of Learning Co. was the worst performer. 

In announcements, Al-Babtain Power and Telecommunication Co. disclosed the results of the third extraordinary general assembly meeting, which included the approval of around a SR213 million increase in the firm’s capital.

The company’s capital has surged from SR426 million to an estimated SR639 million, and the number of shares has increased to 63 million from the previous 42 million. This capital increase aligns with the company’s plan to support its financial position and explore new investments in available untapped opportunities, according to a bourse filing. 

In another development, Saudi Awwal Bank announced its intention to offer first-tier capital sukuk denominated in riyals through private placement within the Kingdom. HSBC Saudi Arabia has been appointed as the organizer and distributor of the program, with the offering value to be determined based on market conditions at a later time. 


RSI secures $88m financing from Al Rajhi Bank for acquisition 

RSI secures $88m financing from Al Rajhi Bank for acquisition 
Updated 01 October 2023
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RSI secures $88m financing from Al Rajhi Bank for acquisition 

RSI secures $88m financing from Al Rajhi Bank for acquisition 

RIYADH: Saudi modular building solution provider Red Sea International has sealed a SR330 million ($87.9 million) financing deal with Al Rajhi Bank. The arrangement includes a SR250 million loan to facilitate RSI’s acquisition of a 51 percent stake in the Fundamental Installation for Electric Work Co. Ltd., also known as First Fix. 

The agreement is valid until the completion of the acquisition process, with a repayment tenure of seven years, providing both RSI and Al Rajhi Bank with financial clarity, according to a bourse filing.  

Guarantees for the financing include a pledge of shares in RSI’s sister company and First Fix.  

RSI has also allocated project proceeds to cover the loan’s annual repayment, including interest, and has provided a promissory note under the agreement, backed by one of its sister companies, noted the filing. 

The deal involves related parties Al-Dabbagh Group, Tanmiah Commercial Group, and Petromin Corp. 

In June, RSI announced the acquisition of 51 percent of the share capital of First Fix through cash consideration. 

“RSI will gain a critical stream of electromechanical construction capability which are very crucial to every single client need,” said RSI CEO Khalid Fagih in a statement issued during the stake buyout.  

Established in 2014, First Fix is a Saudi construction firm with over 190 top projects, offering integrated design, engineering, and construction disciplines in mechanical, electrical, and plumbing. 

In another development, Al Rajhi Bank, in August, entered into an agreement with the National Center for Privatization to enhance public-private partnerships.  

The deal aims to create opportunities for local and international investors in privatization initiatives. It also involves market research, financial guidance, local and international marketing consultancy, events management, training programs, and knowledge development. 

The deal was signed by Hani Al-Saigh, vice president for strategic marketing and knowledge management at the NCP, and Hossam Al-Basrawi, general manager of corporate banking at Al Rajhi Bank. 


Saudi Arabia issues 136 industrial licenses in August 2023

Saudi Arabia issues 136 industrial licenses in August 2023
Updated 01 October 2023
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Saudi Arabia issues 136 industrial licenses in August 2023

Saudi Arabia issues 136 industrial licenses in August 2023

RIYADH: Saudi Arabia’s economic activity gained momentum with the Ministry of Industry and Mineral Resources issuing 136 industrial licenses in August compared to 102 in July.

According to the Saudi Press Agency, the food product manufacturing sector received 29 permits, followed by the non-metallic mineral industry with 21.

Moreover, the rubber and plastics industry obtained 15 permits, and 12 licenses were issued in the paper production sector.

The SPA report added that the ministry issued 795 industrial licenses between January and August. The number of factories during this period reached 11,110, taking the total investments made by these firms to SR1.489 trillion ($400 billion).

The SPA report further noted that investment volume in August for new licenses stood at SR1.6 billion.

Small enterprises accounted for 83.09 percent of the total licenses issued in August, followed by medium enterprises with 16.18 percent and micro-enterprises with 0.74 percent.

The report added that national factories held the most significant chunk of the total licenses at 76.47 percent, followed by foreign establishments and joint-investment firms with 16.18 percent and 7.35 percent, respectively.

On the other hand, 87 factories started production in August, with an investment of SR1.5 billion. Of these plants, 79.31 percent were national factories, 12.64 were foreign establishments and 8.64 percent were joint investment firms.

Meanwhile, the ministry issued 36,293 certificates of origin in August, up from 34,926 in July.

The initiative is seen as a part of the ministry’s efforts to boost exports across various sectors.

A certificate of origin is a pivotal document in international trade, validating that the exported goods are on a nationality basis.