London: Citigroup, which recently received a licence from the Saudi Arabian Capital Market Authority (CMA), expects to start Saudi operations in the first quarter of 2018.
The CMA licence enables the bank to provide a full range of investment banking, debt and equity capital markets, and securities research capabilities to its local and international institutional clients.
“Saudi Arabia is a regional economic leader and a strategically important market for Citi. The economic transformation plan of the Kingdom based on Vision 2030 is substantial and we will be working very closely with the authorities achieve this vision,” said Jim Cowles, Citi’s CEO for Europe Middle East and Africa.
The new business will be branded Citigroup Saudi Arabia and will provide a full range of investment banking, debt and equity capital markets, markets, and securities research capabilities to its local and international institutional clients.
Citi’s CMA licence has paved the way for its return to Saudi Arabia after an absence of nearly 13 years and comes at a crucial time: investment opportunities are opening as the kingdom diversifies its economy away from oil under its National Transformation Plan.
Citi’s institutional capabilities in the region include Treasury & Trade Solutions, Corporate & Investment Banking, Markets & Securities Services and Capital Markets Origination.
As the Saudi government prepares to list up to 5 per cent of oil giant Saudi Aramco in an initial public share offering that could raise as much as $100 billion with a number of fund-raising and mergers and acquisition opportunities in the pipeline, the bank expects to play a leading role in capital market business in the kingdom.
Saudi Arabia’s ambitious plan to wean its economy away from oil has global banks lining up for a piece of the action. As part of the fiscal adjustment programme and structural reforms, the government has been raising funds in the international market. Citigroup has been part of the fund-raising efforts including bonds and sukuks.
Citi officials expect capital markets activity, particularly debt issuance and mergers and acquisitions to pick up pace in the Gulf Cooperation Countries (GCC) next year in the context of low oil prices warranting regional governments to raise funds in the market, according to Citigroup officials.
“Last year and this year business from the GCC was exceptionally good. We expect to see growing business from the region where capital raising is picking momentum as both governments and private sector entities are raising funds to meet the funding shortage resulting from low oil prices. We expect to see another year of record capital markets business from the region,” said Cowles.
While the supply side of debt capital market issuances is supported by governments, government related entities, corporates and banks the demand side of issuances from the region is expected be supported by yield-thirsty fixed income investors seeking to invest in high-grade GCC sovereign and corporate bonds.