Riyadh : Citigroup aims to open for business in Saudi Arabia six years after selling its stake in a bank there.
However the bank is discovering that returning to the Saudi market might not be as easy as departing.
Since leaving the country in 2004, the company has said it would like to regain a foothold.
However Georgetown University's Center for Contemporary Arab Studies visiting associate professor Jean-Francois Seznec said Saudi officials were protecting the country's banks from new competition.
"They're not as in love with US banks as they used to be," Seznec said by telephone from Saudi capital Riyadh.
"The competitive environment is really key to this. Citibank was very successful here in the past."
Billionaire shareholder Prince Al Waleed Bin Talal, Saudi Arabia's richest businessman, said on April 27 in an interview with Bloomberg Television that the country "welcomes the presence of a Citibank office".
Prince Al Waleed said in an interview last month he was helping New York's Citigroup and its chief executive officer, Vikram Pandit, set up in Saudi Arabia.
The US company, in which filings show Prince Al Waleed held 218 million shares as of November 2008, started a business in Saudi Arabia in 1955.
Citigroup sold its 20 per cent holding in Saudi American Bank, now known as Samba Financial Group, to a state investment group in 2004, netting $760 million (Dh2790 million).
The previous year, it had ended its management contract with the bank after first selling a 2.83 per cent stake. A fifth of Samba's market value today equates to about $2.9 billion, according to Bloomberg data.
Under Control
The company, then the largest financial services company in the world, said its strategy was to invest in countries where it could have majority control of the banks it ran.
Citigroup is the fourth-largest bank in the US.
"The franchise that Citibank led in Saudi Arabia was very robust and prosperous for many years and they decided at that point to exit," said Riyadh's Banque Saudi Fransi chief economist John Sfakianakis.
The central bank, the Saudi Arabian Monetary Agency (SAMA) "has temporarily halted the issuance of new bank licences in order to evaluate the many licences issued so far," he said.
SAMA and the country's regulator, the Capital Markets Authority, did not respond to questions.
Citigroup's Dubai spokesman, Karim Seifeddine, also declined to comment.
William Rhodes, the Citigroup senior vice-chairman stepping down this month, said in 2006 that the bank was interested in returning to Saudi Arabia.
Mistake
A year later, Mohammad Al Shroogi, the Middle East managing director, called the exit a "mistake" and said the bank was reapplying for a licence to operate.
Competitors such as Tokyo's Nomura Holdings, New York's Goldman Sachs Group, and Deutsche Bank AG meanwhile have expanded in the Arab world's largest economy.
Frankfurt's Deutsche Bank announced April 12 the formation of Deutsche Gulf Finance, a joint Sharia-compliant home financing company owned 40 per cent by the bank's Riyadh branch and 60 per cent by Saudi investors.
The government forecast the Saudi Arabian economy to grow more than four per cent this year, after 0.2 per cent last year.
The world's largest oil exporter is spending $400 billion on infrastructure to stimulate the economy.
Bank lending to private companies rose 1.6 per cent in February.
That growth averaged 27 per cent between 2004 and 2008, according to Riyadh's Jadwa Investment Company.
Twenty banks have full banking licences and branches operating in the kingdom, according to the central bank's February monthly statistics bulletin.
