Saudi Arabia’s financial regulator Saudi Arabian Monetary Agency (SAMA) has been active in liberalizing the sector and has licensed a number of GCC/foreign banks to establish their presence in the Saudi market. Gulf International Bank of Bahrain was the first to acquire a license to open a branch in KSA in 2000. A number of licenses for banks from the GCC countries including Emirates Bank International, National Bank of Kuwait and the National Bank of Bahrain followed. The attraction of the Saudi banking sector surpassed the region, as 3 foreign banks namely, Deutsche Bank, JP Morgan Chase, and BNP Paribas were allowed to start operations in the Kingdom, further opening up the financial sector. Moreover, HSBC has been approved to establish an investment banking operation in Saudi Arabia.
The year 2005 marked the entry of a new player Bank Albilad whose IPO generated huge investors’ response and was oversubscribed by more than 5 times as the number of subscribers reached 8.7mn with a total investment of SR7.75bn. Al Bilad public subscription was considered to be the largest, not just in Saudi Arabia, but also in the region.
During the period 2001-2005, total assets of the Saudi commercial banks grew at a CAGR of 12.6% to SR759.1bn by the end of 2005. In 2005, claims on private sector accounted for 57.4% of total assets while foreign assets accounted for 12% of the total assets. However, foreign assets declined at a CAGR of 2.1% during the said period dropping to SR91.4bn in 2005. Claims on private sector, which include credit to private sector and investments in private securities, increased at a CAGR of 23.6%. Other assets increased at a CAGR of 4.5% during the same period. (Global Investment House)