Foreign banks plan Saudi expansion amid economic reform

Goldman Sachs, JPMorgan, UBS and Citigroup are all planning to substantially increase their headcount in Saudi Arabia, executives said, as foreign banks expect lucrative opportunities from the country’s privatisation boom and its increasingly liberalised financial markets. 

Wassim Younan, Goldman Sachs’ regional boss, said his bank could double its Saudi headcount in the next 12 months, while UBS plans to double its Riyadh workforce over the coming years.

JPMorgan will increase headcount in Saudi Arabia by about 50 per cent, to 100 people, within the next three years, making the bank’s Riyadh office the same size as its regional headquarters in Dubai.

Citi is in the process of hiring as many as 15 people to staff its newly-reopened office in Riyadh.

And the chief executive of First Gulf Abu Dhabi Bank, the regional mega bank formed from the merger of First Gulf Bank and National Bank of Abu Dhabi, said that opening a Saudi business “makes a lot of sense” for his bank in the “medium term”.

The international banks are hoping to cash in on a flurry of stock market listings, privatisations and financings promised by Vision 2030, the blueprint to transform the largest country in the Gulf area from a public sector oil dependent economy to a diversified private sector one.

Bankers also hope that the liberalisation of Saudi’s stock markets, and big ticket listings such as Saudi Aramco’s, will tempt international and domestic investors to the market, creating opportunities for banks’ sales and trading businesses.

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“The current outlook has never looked better for Saudi Arabia,” said Mr Younan, who has led Goldman’s Middle East and north Africa business for 11 years. “Given this outlook, we are increasing our headcount in Saudi Arabia, and I would say it would not be unreasonable to expect it to double over the next 12 months.” 

Mr Younan would not say how many people Goldman currently has in Riyadh, where it gained a licence for Saudi equities trading in August and was hired to advise on the privatisation of Riyadh airport in July. 

The banker believes the business opportunity in the kingdom will be a “permanent” one, not just a frenzy of activity as Vision 2030 is executed. 

“We at Goldman believe in the 2030 vision and we have a very high confidence in the ability of the most senior leadership team in Saudi Arabia to execute that strategy and accomplish that vision,” he said. “We think the outlook for our business is permanently promising.”

JPMorgan, which has 70 people in Saudi Arabia at present, is likely to expand to 100 people in the next three years, the bank said. That will make its Saudi operation the same size as Dubai, but while Dubai is a regional hub, the Riyadh office will be focused on domestic business.

Atiq Rehman, Citi’s head of Middle East and Africa, said “clearly Saudi is the single biggest incremental opportunity, there is a very large need for international capital which is driven by the Vision 2030 plan”. After getting an onshore Saudi licence in late April, Citi hopes to have between 10 and 15 people on the ground locally by May 2018. 

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They will also be supported by colleagues in Dubai, where Citi’s Saudi head Carmen Haddad is based. Mr Rehman believes that Citi can expand the business at 10 to 12 per cent annually. 

UBS said it would double its headcount in Riyadh in the coming years, but would not disclose its starting point. It has 60 staff covering the region now, but many of those are based in Dubai. 

At FAB, chief executive Abdulhamid Saeed said that Vision 2030 and Saudi’s national transportation plan made the market attractive. “For a financial institution like FAB, having a presence in Saudi Arabia would indeed make a lot of sense in the medium term,” he said.