JEDDAH, 4 December 2003 — The HSBC group wants to establish an international investment bank in Saudi Arabia early next year to finance giant infrastructure projects, especially in the water and electricity sectors.
The London-based international banking group has applied for a license to establish the bank, Sir David Gore-Booth, a former British ambassador to Riyadh and key adviser to the bank, told an investment conference in London on Monday.
Saudi Arabia has this year given the go-ahead for majority foreign ownership of investment banks.
“HSBC has applied for a license to set up the venture and hopes to start the ball rolling by early next year,” Gore-Booth told Saudi and British businessmen.
“The plan is to take advantage of this opening, to establish a capability to provide project finance in a market where the need for such finance is growing exponentially,” said Gore-Booth.
“The new bank will focus on financing giant projects in Saudi Arabia, especially infrastructure projects in the water and electricity sectors,” Al-Eqtisadiah, a sister publication of Arab News, quoted Gore-Booth as saying.
Alongside project finance, the new HSBC-led bank will also look at activities such as merger and acquisition advice, succession planning and equity capital markets.
Prince Abdullah ibn Faisal, chairman of the Saudi Arabian General Investment Authority (SAGIA), has said that the Kingdom requires new investments worth more than $1 trillion (SR3.75 trillion) over the next 20 years.
The SAGIA chief identified electricity, water, communications, petrochemicals, gas, agriculture, railways, information technology, tourism, education, minerals and infrastructure projects as potential areas for new investments in the Kingdom.
A recent study conducted by the Dubai Center for International Research and Studies and the Gulf Organization for Industry Consultations, says the Kingdom’s electricity sector alone will require $90 billion (SR337.5 billion) in investment over the next 20 years.
Last month, HSBC was the target of a bomb attack in Istanbul in which three staff members were killed. However, the bank has reaffirmed its commitment to the region.
“We’re a bank that is in the Middle East for the long haul,” said Gore-Booth. He said the bank would be taking “normal and necessary precautions” in light of the Istanbul bombing.
Four foreign banks have already won licenses to open branches in Saudi Arabia. They are Deutsche Bank, Abu Dhabi Bank, Kuwait Bank and the Gulf International Bank.
According to Al-Eqtisadiah, a team from Deutsche Bank has already visited Riyadh to start operations in the Kingdom. Analysts expect that more international banks will follow suit.
