RIYADH, Aug 23: Saudi government has permitted the National Bank to set up branches in the kingdom, meeting the longstanding demand of the large Pakistani community here.
The Saudi government also permitted the State Bank of India to open its branches in the kingdom.
A cabinet meeting, chaired by King Abdullah authorized Finance Minister Dr Ibrahim Al-Assaf to decide on new applications by the two banks to open their branches. Saudi Arabian Monetary Agency (SAMA) has been instructed to coordinate with the banks to complete necessary formalities. The Cabinet urged the two banks to follow the kingdom’s regulations such as the banking control law, the companies’ law and the foreign investment law.
At the regular requests of Pakistani community the issue was also taken up at the highest levels. Reportedly when Prime Minister Shaukat Aziz visited Riyadh on his official visit to the Kingdom, he also requested the then crown price to allow Pakistani banks to set up branches here in the Kingdom.
The National Bank had earlier presence in Saudi Arabia with stakes in the Al-Jazeerah Bank. The bank was established with the technical assistance from National Bank in late seventies. A large number of NBP employees were seen manning Al-Jazeerah counters for a long period of time. However, as the business scenario in Saudi Arabia changed over the years, the NBP sold its shares in Al-Jazeerah bank, which was by then already in red. Al-Jazeerah has been turned around in the meantime.
It is not clear as yet, how many branches the NBP and State Bank of India will be allowed to establish in Saudi Arabia.
Currently there are 20 licensed commercial banks in Saudi Arabia, of which 11 are majority Saudi-owned and five GCC banks, though only one of the five GCC banks, Bahrain-based Gulf International Bank, has opened its branch in the kingdom.
In 2003, SAMA also granted four licenses to foreign (non-GCC) banks, namely, Deutsche Bank, HSBC, BNP-Paribas, and JP Morgan.
