The Saudi Arabian Monetary Authority (SAMA) is processing applications for three new banking licences in the country, showing scope for more banks to open in Saudi despite ongoing consolidation in the sector, its deputy governor said on Thursday.
Two are applications for traditional banking licences and one for a digital bank, according to Fahad Alshathri, deputy governor for supervision at SAMA, who was speaking on the sidelines of Euromoney’s Saudi Arabia conference in Riyadh.
Sector consolidation is a key focus across the Gulf, and Saudi Arabia is no exception. Earlier, Saudi British Bank (Sabb) and Alawwal completed the first bank merger in the country, while National Commercial Bank and Riyadh Bank are in ongoing talks.
However, Alshathri said that consolidation did not mean there was no room for new banks in Saudi. SAMA has already approved two new banking licences for Credit Suisse and Standard Chartered this year, as well as the three it is currently considering.
Speaking to bankers and investors at the conference, Alshathri noted that financial integration must make sense from both a market and a regulatory perspective. When evaluating the possibility of future mergers, he said that if there was value to be added, an integration would be considered.
“We will not prevent it if there is a great integration to create economic value to be done,” he said.
However, when pressed on the immediacy of those plans, he said: “There is nothing new except the already integrated banks.”
Earlier this year, SAMA published an update to the guidelines and basic requirements for requesting a banking licence in Saudi, aimed at making it easier for banks to apply.
Rate cuts
Alshathri also raised concerns about slowing global growth. The ongoing trade war between the US and China, as well as the UK’s protracted attempt at leaving the European Union, were factors in Saudi’s 2.3% projected GDP growth for 2019, he said.
“If there is no agreement [between the UK and European Union] the consequences will be more regarding the global economy,” he said.
Central banks globally are increasing monetary stimulus in a bid to kick-start economic growth. Last week, the European Central Bank announced a further package of easing, ahead of a US Federal Reserve rate cut on Wednesday.
In line with the Fed’s 25 basis point rate cut, Saudi also cut its repo rates by 25 basis points to 250 basis points on Wednesday.
“This is the reality of the economy, it is an economic cycle,” he said. “Maybe lowering the rate cycle can improve economic growth. We are all waiting to see how this will impact the economy.”
NOTE: Do you want to trade at forex professionally? trade with the help of our forex robot developed by our programmers.
Signal2forex reviews
Signal2forex.com - Best Forex robots and signals
