Deutsche and HSBC lead foreign banking drive
Highlighting Saudi Arabia's commitment to opening its banking sector to foreign investment, Deutsche Bank and HSBC are set this year to establish majority-owned investment banking operations in the kingdom.
Following a visit by German chancellor Gerhard Schröder (pictured) in October 2003, the Saudi finance ministry announced that Deutsche had become the first western firm to be awarded a foreign banking licence in over two decades. Although Deutsche says it is too early to comment on its activities in Saudi Arabia, local sources say its aim for 2004 is to begin investment banking operations focusing on debt and equity products. Once it gets a feel for the market, it may consider establishing a retail arm.
Capitalizing on its presence in the kingdom as a 40% stakeholder in Saudi British Bank, HSBC is also set to begin investment banking operations this year. Sources report that the licence has been approved and will involve HSBC taking a 60% stake in a joint venture with Saudi British Bank. Sir David Gore-Booth, an adviser to HSBC and a former British ambassador to Saudi Arabia, told a London investment conference last December that the bank hopes "to establish a capability to provide project finance in a market where the need for such finance is growing".