SAMA’s new initiatives propel KSA’s financial landscape forward

SAMA’s new initiatives propel KSA’s financial landscape forward
SAMA Governor Ayman Al-Sayari highlighted how the evolving global landscape introduces new challenges and opportunities for central bank reserve managers. (Shutterstock)
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Updated 26 June 2024
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SAMA’s new initiatives propel KSA’s financial landscape forward

SAMA’s new initiatives propel KSA’s financial landscape forward
  • Host of pivotal initiatives reaffirm dedication to fostering financial innovation and inclusivity

RIYADH: As Saudi Arabia strides forward with its Vision 2030 objectives, the Kingdom’s central bank is at the forefront, driving a host of pivotal initiatives and greenlighting various enterprises in 2024. These actions reaffirm the nation’s dedication to fostering financial innovation and inclusivity. 

The Saudi Central Bank, known as SAMA, has ushered in a wave of programs and approvals this year, ranging from the introduction of secure account services to engaging in high-level discussions on reserve management and expanding investment training endeavors. 

Additionally, it has issued licenses to bolster payment and crowdfunding services, fortifying its pivotal role in the Kingdom’s economic diversification. 

Here are some of the significant developments and initiatives undertaken by SAMA this year:

Enhancing security and accessibility 

In May, SAMA announced the launch of a new initiative named “View My Bank Accounts” for individual bank account holders. The new service aims to enhance reliability and reduce the risks of suspicious transactions, unauthorized account use, and impersonation.  

SAMA added that it is continuously working on developing electronic financial transactions in accordance with international best practices.

Navigating macro-financial challenges 

In April, the apex bank convened a high-level meeting on reserve management, targeting the complexities of the current macro-financial environment. The event united reserve managers and experts from central banks across the Middle East and North Africa region, alongside participants from other apex financial institutions, to delve into the latest trends in managing foreign exchange reserves.  

SAMA Governor Ayman Al-Sayari highlighted how the evolving global landscape introduces new challenges and opportunities for central bank reserve managers. He emphasized the significance of such high-level meetings in navigating the complexities of the current macro-financial environment. 

Investment immersion program

In another development, the Saudi Central Bank initiated the registration process for its fourth edition of the Investment Immersion Program in April, aimed at nurturing and employing local investment professionals.  

Developed in collaboration with the Wharton School of the University of Pennsylvania, alongside major global banks and asset managers, this program offers a comprehensive curriculum featuring academic courses and practical training across various investment domains. 

“The program offers an advanced technical course, on-the-job training with international banks and assets management companies, and job-rotation in the investment deputyship at the Saudi Central Bank under the supervision of experts in asset management and global financial markets,” said SAMA. 

Additionally, participants will benefit from continuous development programs aimed at enhancing their technical investment skills, as well as a range of distinctive employment perks.  

The program is tailored for Saudi nationals below the age of 27 who hold bachelor’s or master’s degrees in finance, accounting, economics, statistics, or business-related fields from either domestic or accredited international universities. 

Steering financial stability

In February, the central bank, represented by SAMA Gov. Al-Sayari, co-chaired the Financial Stability Board Regional Consultative Group for MENA meeting in Riyadh.  

Also in attendance were Hassan Abdulla, governor of the Central Bank of Egypt, and Klaas Knot, chair of the Financial Stability Board.  

Discussions during the meeting centered on the challenges related to global and regional financial stability vulnerabilities, including the implementation of the global regulatory framework for crypto-asset activities. 

Additionally, the meeting analyzed lessons learned from the turmoil that affected the global banking sector in 2023, along with the financial risks arising from the high-interest rate environment and non-bank financial intermediation.  

Al-Sayari emphasized the MENA region’s emergence as a global development hub, driven by strategic location and ongoing economic diversification efforts. He also highlighted the International Monetary Fund’s affirmation in its Regional Economic Outlook that MENA is resilient to adverse macro-financial risk scenarios. 

Al-Sayari underscored the importance of devising plans that support financial stability while aligning with the economic and financial conditions of the region, fostering interrelation between its economies.  

Members also received an update on the FSB’s work program for 2024 and discussed the FSB’s report on initial lessons learned from the banking disturbances in 2023.  

The FSB’s Regional Consultative Group for the MENA region includes finance and regulatory authorities from Saudi Arabia, Kuwait, and the UAE, along with Bahrain, Oman, and Qatar. Additionally, it encompasses Egypt, Algeria, and Jordan, as well as Lebanon, Morocco, Tunisia, and Turkiye.

Fostering financial innovation 

Throughout the year, the central bank has been proactive in granting licenses to various payment and crowdfunding service providers. 

It commenced the year by authorizing Thara to offer debt-based crowdfunding solutions. Concurrently, SAMA also granted licenses to Network International Arabia for point-of-sale payment services and to Barraq for e-wallet services. 

HIGHLIGHTS

• The Saudi Central Bank, known as SAMA, has ushered in a wave of programs and approvals this year, ranging from the introduction of secure account services to engaging in high-level discussions on reserve management and expanding investment training endeavors.

• SAMA Governor Ayman Al-Sayari underscored the importance of devising plans that support financial stability while aligning with the economic and financial conditions of the region, fostering interrelation between its economies.

“This decision reflects SAMA’s endeavor to support the financial sector, increase efficiency of financial transactions, and promote innovative financial solutions for financial inclusion in Saudi Arabia. SAMA emphasizes the importance of dealing exclusively with authorized financial institutions,” said the apex financial institution.  

In February, the central bank extended authorization to Alpha Arabia Finance Co. to engage in financing activities for small and medium enterprises. 

In April, SAMA licensed Funding Souq to provide debt-based crowdfunding solutions, thereby bringing the total number of such companies operating in the Kingdom to 10.

Sohar International receives SAMA’s nod 

In January, Sohar International, the second-largest bank in Oman, received a non-objection certificate from SAMA as it set its sights on expanding into Saudi Arabia.  

This strategic move aligns with the bank’s growth strategy, demonstrating its capability to identify sustainable expansion opportunities.  

The bank’s entry into the Saudi market is anticipated to assist Omani corporations seeking to enter the Kingdom’s market. 

“At the core of the bank’s strategic expansion lies a synthesis of personalized, customer-focused offerings and avant-garde services. These form the linchpin of the bank’s overarching strategy, aiming not only for growth but also for the sustained enhancement of the customer experience in an ever-evolving financial landscape,” said Ahmed Al-Musalmi, CEO of Sohar International.  

Overall, SAMA’s proactive measures underscore its commitment to supporting Saudi Arabia’s economic growth and resilience in an ever-evolving global financial landscape.


Closing Bell: Saudi main index steady at 12,101.21

Closing Bell: Saudi main index steady at 12,101.21
Updated 13 sec ago
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Closing Bell: Saudi main index steady at 12,101.21

Closing Bell: Saudi main index steady at 12,101.21

RIYADH: Saudi Arabia’s Tadawul All Share Index was steady on Wednesday, as it shed just 4.33 points or 0.04 percent to close at 12,101.21.

The total trading turnover of the benchmark index was SR6 billion ($1.60 billion) with 108 of the listed stocks advancing, while another 108 declining. 

The Kingdom’s parallel market showcased a positive performance, as it gained 173.13 points to close at 26,337.13. 

The MSCI Tadawul Index marginally shed 0.05 points to 1,512.89.

Kingdom Holding Co. was the best-performing stock of the day, as the firm’s share price surged by 8.52 percent to SR8.53. 

Other top performers on the main index were the Mediterranean and Gulf Insurance and Reinsurance Co. and Amlak International Finance Co., whose share prices soared by 6.71 percent and 5.36 percent, respectively. 

The worst performer of the day was Arabian Contracting Services Co., as its share price declined by 3.14 percent to SR228.60. 

Share prices of Dr. Soliman Abdel Kader Fakeeh Hospital Co. and Modern Mills for Food Products Co., also slipped by 3.04 percent and 2.62 percent, respectively. 

The positive performance of Nomu was driven by Clean Life Co., with its share price edging up by 12.90 percent to SR105. 

The share prices of Naba Alsaha Medical Services Co. and Qomel Co. – both listed on the parallel market – also increased by 10 percent and 5.76 percent, respectively. 

The worst performer on Nomu was Alhasoob Co., which saw its share price edge down by 5.79 percent to SR50.40. 

Other losers on the parallel market were Marble Design Co. and Al Rashid Industrial Co., whose share prices slipped by 5.56 percent and 4.86 percent, respectively. 

On the announcements front, Sure Global Tech Co. said that it received a contract worth SR13.97 million from Saudi Arabia’s Research, Development and Innovation Authority. 

In a press statement, the company revealed that the scope of the contract includes establishing and developing a national electronic platform for RDIA to manage and support the authority’s research, development and innovation. 

The three-year project aims to create and develop a national e-platform for research management that considers the requirements of digital government, Sure Global Tech added. 


Saudi minister targets food production localization and aviation cooperation during Brazil visit

Saudi minister targets food production localization and aviation cooperation during Brazil visit
Updated 14 min 56 sec ago
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Saudi minister targets food production localization and aviation cooperation during Brazil visit

Saudi minister targets food production localization and aviation cooperation during Brazil visit

RIYADH: Food production localization and aviation were areas of focus as a senior Saudi minister met with leading Brazilian companies during a trip to the South American country.

The Kingdom’s Minister of Industry and Mineral Resources, Bandar AlKhorayef, held talks with executives from Minerva Foods and JBS, which are prominent in the red meat and poultry sectors. 

The discussions aimed to explore opportunities for localizing food production within Saudi Arabia, transferring knowledge and innovations, and examining the latest advancements in modern manufacturing technologies. 

In a separate meeting, AlKhorayef spoke with a top official from Brazilian aviation company Embraer.

The visits highlight Saudi Arabia’s strategic effort to enhance production capabilities by fostering international partnerships and utilizing advanced manufacturing technologies.

It aligns with the Kingdom’s broader vision to diversify its economy and develop robust, sustainable industries in collaboration with global leaders. 

During the visit to Minerva Foods’ facilities, the minister reviewed advanced manufacturing technologies and discussed potential investment opportunities with company officials, according to the Saudi Press Agency. 

Minerva Foods is a notable player in the Saudi market, where imports, particularly red meat, account for 25 percent of the industry. The Saudi Agricultural and Livestock Investment Co., also known as SALIC, is a major investor in Minerva, holding a 33.8 percent stake. 

SALIC acquired a 19.5 percent stake in 2016 for $210 million, increasing its investment through additional purchases in 2018 and 2020, totaling $204 million. 

The minister also met with Gilberto Tomazoni, CEO of JBS, one of the world’s largest meat and poultry producers known for developing cultivation and production technologies.

JBS is currently establishing a food factory in Jeddah under the Seara brand, with an investment of up to SR500 million ($133.29 million). The facility is expected to start operations by the end of this year, aiming to address the food needs of the Saudi market. 

The partnerships with Minerva Foods and JBS underscore the Kingdom’s dedication to ensuring a stable food supply while attracting foreign investment and expertise to its growing food industry, the SPA report added. 

The minister’s visit to meat production facilities came after he met with leading Brazilian pharma companies to discuss enhancing the localization of vaccines and pharmaceuticals, leveraging the country’s expertise. 

During his discussions, AlKhorayef emphasized the potential for collaboration, highlighting the sector’s importance to Saudi Arabia’s National Industrial Strategy.

AlKhorayef also engaged in discussions with Dimas Douglas Tomlin, executive vice president of strategy and innovation at Brazilian aviation company Embraer.

The dialogue was centered on enhancing cooperation in the sector and localizing its operations within the Kingdom, a release by the ministry said. 

They further explored ways to strengthen collaboration between Saudi Arabia and Embraer, leveraging the Brazilian company’s expertise in aircraft manufacturing, assembly, and maintenance. 

This initiative is part of the Kingdom’s broader efforts to diversify its economy and develop new, advanced industries, aligning with the national strategy that targets 12 sectors, including aviation.

During his visit, the minister toured several of Embraer’s key facilities, including the Ozires Silva, Eugenio de Melo, and Gavião Peixoto sites. 

Interaction between the Kingdom and the Brazilian company began during the Saudi-Brazilian Aviation Forum in 2023. 

In May 2024, Embraer, the Kingdom’s National Industrial Development Center, and business conglomerate AHQ Group signed a memorandum of understanding to enhance the aviation ecosystem in Saudi Arabia. 

This partnership aims to adopt Embraer aircraft, foster technological cooperation, and develop the supply chain.


Turkiye, Saudi Arabia end $5bn deposit agreement

Turkiye, Saudi Arabia end $5bn deposit agreement
Updated 24 July 2024
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Turkiye, Saudi Arabia end $5bn deposit agreement

Turkiye, Saudi Arabia end $5bn deposit agreement

RIYADH: Turkiye has terminated a $5 billion deposit agreement made with the Saudi Fund for Development as part of a review of its reserve management strategy.

The decision to end the arrangement, finalized with Saudi authorities, is expected to improve Turkiye’s external liabilities by approximately $7 billion through the reduction of deposit balances, according to the country’s central bank.

The original deal was signed off in March 2023, and was intended to provide crucial financial support to the Turkish economy as it grappled with the aftermath of devastating earthquakes and high inflation rates. 

The country’s central bank announced the agreement had been ended as part of a reassessment of Turkiye’s international deposit transactions in a bid to lower its external liabilities.

International reserves are readily available assets controlled by countries’ monetary authorities that can be used for international payments and converted into other currencies, the bank said.

When the deal was initially reached, the Saudi Fund for Development described it as not only underscoring the strong historical ties and cooperation between the two nations, but also showcasing the Kingdom’s commitment to bolstering Turkiye’s economic stability.

Turkiye has been working to strengthen its economic and business relationships with Gulf nations, including the UAE and Saudi Arabia, as part of its strategy to attract foreign currency inflows. 

On March 3 2023, Turkiye and the UAE signed a comprehensive economic partnership agreement to cut 93 percent of tariffs on non-oil trade and increase bilateral trade from $19 billion to $40 billion in the next five years.

Turkiye has struggled with a shortage of international reserves and high inflation rates, impacting living costs. 

In 2022, the Turkish lira depreciated by 30 percent against the dollar, exacerbated by soaring energy prices following Russia’s invasion of Ukraine.

Turkiye is the 17th largest economy in the world, according to the International Monetary Fund, with a GDP of $1.024 trillion as of 2023.

In February 2023, the country contended with the aftermath of severe earthquakes which caused significant casualties, damage, and displacement, with recovery needs estimated at $81.5 billion.

Following the May 2023 elections, Ankara’s new economic team has aimed to address inflation and macroeconomic imbalances. 

The economy grew 4.5 percent in 2023 but is expected to slow to 3 percent this year.

Addressing long-term issues like high inflation, low productivity, and weak foreign investment “would require robust fiscal measures and ambitious structural reforms to help accelerate sustainable economic growth,” the World Bank said earlier in April.


Dubai’s economy grows 3.2%, driven by financial, trade and transport sectors

Dubai’s economy grows 3.2%, driven by financial, trade and transport sectors
Updated 28 min 15 sec ago
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Dubai’s economy grows 3.2%, driven by financial, trade and transport sectors

Dubai’s economy grows 3.2%, driven by financial, trade and transport sectors
  • Transportation, storage, financial and insurance activities sectors each posted a growth rate of 5.6%
  • Trade sector recorded a 3% increase

RIYADH: Dubai’s economy saw 3.2 percent year-on-year growth in the first quarter of 2024, with its gross domestic product reaching 115 billion dirhams ($31.3 billion). 

The transportation and storage industry, as well as the financial and insurance activities sector, each posted a growth rate of 5.6 percent, while the trade sector recorded a 3 percent increase. 

This comes as Dubai’s economy continues its upward trajectory, with significant growth across key sectors, reflecting the government’s strategic agenda to enhance the emirate’s global economic standing and attract foreign investment. 

Dubai’s Crown Prince Sheikh Hamdan bin Mohammed Al-Maktoum said the latest GDP figures cement the fact that the emirate showcases robust economic indicators, the Emirates News Agency, also known as WAM, reported. 

“Dubai is progressing in accordance with a clear vision whose foundations were laid down and whose goals were defined by His Highness Sheikh Mohammed bin Rashid Al-Maktoum. What we witness today is a practical reflection of this vision, which has placed Dubai among the leading economic and commercial centers of the world,” said Sheikh Hamdan. 

He added that the accomplishments of the emirate underscore the collaborative endeavors and teamwork of diverse stakeholders in achieving the goals set out in the emirate’s comprehensive development plans for 2033. 

The government’s plans include the Dubai Economic Agenda and Dubai Social Agenda 2033, both aimed at elevating overall well-being and quality of life, while strengthening the emirate’s position as a leading global economic hub and enhancing its appeal as a destination for foreign investments. 

“Dubai’s ambition is limitless, and its success story will remain a role model for cities wishing to create a promising future for their coming generations. Our goal is to sustain success and establish a culture of excellence and leadership across all sectors in the emirate to preserve these gains and move toward new horizons of excellence,” he added. 

Other sectors also contributed to the overall economic expansion, with the information and communications sector rising by 3.9 percent, the accommodation and food services sector increasing by 3.8 percent, and the real estate sector seeing growth of 3.7 percent.

Helal Saeed Almarri, director-general of the Department of Economy and Tourism said: “Dubai’s impressive quarterly growth performance underscores the sustained momentum and confidence within its dynamic business ecosystem, reflecting the robust diversification of our economic foundations.”

He added that initiatives such as the Foreign Direct Investment Development Program and the implementation of the Dubai Economic Model to monitor the city’s advancement will further help fuel the economy’s output.

“These measures will enhance collaboration between public and private sector stakeholders, propelling Dubai toward its goal of achieving top global status for economic growth and becoming a prime destination for business, talent, and investment,” Almarri further said.

In 2023, Dubai’s GDP reached approximately 429 billion dirhams, marking an annual increase of 3.3 percent.


Riyad Bank introduces first AI center in Saudi banking industry

Riyad Bank introduces first AI center in Saudi banking industry
Updated 24 July 2024
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Riyad Bank introduces first AI center in Saudi banking industry

Riyad Bank introduces first AI center in Saudi banking industry

RIYADH: Saudi Arabia’s digital banking has achieved a significant advancement after a leading bank introduced artificial intelligence technology, significantly enhancing its operational efficiency and customer experience.

Riyad Bank announced on July 23 the launch of the first-of-its-kind specialized center for artificial intelligence technologies and services in the Saudi banking sector, known as the Center of Intelligence.

It will allow the bank and its business sectors to harness the latest AI innovations and derive significant value from advanced, proactive analytical insights, while advancing the bank’s vision with the highest standards of quality and innovation, according to a statement from the financial institution.

The move aligns with the broader national goals outlined in Saudi Vision 2030, particularly the Financial Sector Development Program, which works together with the Saudi Central Bank to provide banking services that are more accessible.

The program is committed to contributing to the stability and growth of the banking system to make it even more convenient by investing in technology and offering a wide range of financial products and services.

The center will offer a cutting-edge environment for AI-driven research, innovation, and analysis. It will also utilize machine learning techniques and solutions to improve the effectiveness and efficiency of the bank’s investments and operations. 

Nadir Al-Koraya, CEO of Riyad Bank, expressed his pride in this qualitative addition achieved by launching the center to localize AI solutions in the Saudi business sectors in alignment with the country’s plans and strategic objectives.

“The center is the result of our continuous efforts to optimize the investment of capabilities in order to maximize the value achieved for our customers, shareholders and the bank’s employees,” he said, adding that it will accelerate the bank’s digital transformation and innovation, driving greater productivity across its operations.

In April, the bank – one of Saudi Arabia’s largest financial institutions – approved the assessment and preparation of an initial public offering of its investment banking unit, Riyad Capital. 

According to a Tadawul statement issued at the time, the board of directors were considering listing the subsidiary on the main market of the Saudi Exchange.

It said the two bodies would coordinate to finalize the assessment and the relevant measures, including determining the offering size as well as other related details.