Coming during a visit to the kingdom by Germany’s Chancellor Gerhard
Schröder on October 6, the licence is the first to be granted to a
non-Arab bank in decades. More licences to international banks are
expected to follow.
Earlier this year, the long-awaited capital markets law was approved,
clearing the way for a new era of financial liberalisation. The Saudi
Arabian Securities and Exchange Commission was established, thereby
creating the infrastructure for focused investment banking and broking
institutions.
While the licence for Deutsche has no limitations on the type of
business that can be done, the bank said that initially it would focus
on wholesale activities. The bank, which is unlikely to begin
operations in Saudi Arabia before next year, will enter a relatively
closed market of 10 major banks, including five with international
banks as minority shareholders.
However, with pressure from the World Trade Organization plus the new
legislation, the financial sector is opening up slowly. A number of
Gulf banks, including Bahrain’s Gulf International Bank and National
Bank of Kuwait, have been granted licences recently but Deutsche is the
first global bank to be granted a full licence.
