Standard Chartered affiliate gets Saudi brokerage permit

Riyadh: The Saudi bourse watchdog said it awarded a brokerage licence to an affiliate of Standard Chartered, which has been pushing for a wider commercial banking presence in the largest Arab economy.

In a statement, the Capital Market Authority (CMA) said Standard Chartered Capital Saudi Arabia would also be allowed to manage assets and investment funds and operate as an underwriter.

Saudi Arabia accounts for almost half the Gross Domestic Product (GDP) of the rich Gulf Cooperation Council (GCC) bloc and has the Arab world's biggest stock market.

This has lured foreign banks and financial services firms into setting up shop in the country, though its stock exchange has yet to recover from fallout from a crash that started in early 2006.

Competition

There are now some 110 licensed brokerage firms in Saudi Arabia, the vast majority authorised after the 2006 crash that drastically reduced volumes and heated up competition with the local banks that dominate the industry.

Standard Chartered has expressed interest alongside Emirates NBD and National Bank of Kuwait in buying a stake in local lender Saudi Hollandi Bank owned by a Royal Bank of Scotland-led consortium.

Interest

StanChart's interest in the stake followed a decision by the Saudi central bank to put on hold a short-lived policy of granting commercial banking licences to foreign lenders, which benefited mainly regional players such as National Bank of Kuwait and Emirates NBD.

Analysts say the Saudi banking system is too concentrated for the size of the country's population.