Citigroup Said in Talks for Saudi Return After Exit in 2004

  • U.S. bank is in advanced discussions for a banking license
  • Bank asking employees to consider potential Saudi Arabia move

Citigroup Said in Talks for Saudi Arabia Banking License

Citigroup Inc. is in advanced discussions for a banking license in Saudi Arabia, returning after a more than 10-year absence from the kingdom, as the bank looks for ways to capitalize on financial reforms, according to people familiar with the matter.

The New York-based bank has started sounding out potential staff in expectation that the license application will succeed, the people said, asking not to be identified as the information is private. Ahmed Bozai, Citigroup’s chief operating officer for Middle East and Africa, and Carmen Haddad, a senior private banker for the firm’s operations in the region, are among executives in talks with Saudi Arabian regulators, two of the people said.

The bank has yet to receive a license and talks may still falter, they said. A spokeswoman for Citigroup declined to comment. The Capital Market Authority, which would issue the license, said in a statement that it won’t comment on any application before a final decision is reached.

The license would seal the bank’s return to the kingdom after winning a role as lead adviser on the country’s first international bond sale, which raised $17.5 billion last year. Saudi Arabia is becoming more attractive to foreign banks as it takes steps to overhaul its economy, including plans for what could be the largest ever initial public offering with the listing of Saudi Arabian Oil Co.

Citigroup has set up a company-wide task force, led by some of its most senior employees, to target business opportunities in Saudi Arabia, people familiar with the matter said in September. The firm lost a key banking license when it sold its stake in Samba Financial Group in 2004. The bank made unsuccessful attempts to return to the country in 2006 and 2010.

Exit ‘Mistake’

Without a license from the CMA, international banks face restrictions on working on deals that are signed in Saudi Arabia or takeovers in which the target company is based in the kingdom.

Citigroup can already pitch for international bonds and advisory work for Saudi clients from Dubai or their other global offices. The U.S. bank was also able to pitch for the sovereign bond as the government is excluded from CMA rules.

The bank opened its Saudi operations in 1955 in the Red Sea port of Jeddah. In the 1970s, the government forced foreign banks to sell majority stakes in their local operations to Saudi nationals, but a 2003 capital-market law opened the door for foreign banks to apply for licenses.

In 2004, Citigroup was focusing on countries where it could control a majority stake. That strategy led to the sale of its 20 percent stake in Samba, formerly known as Saudi American Bank, to the state’s Public Investment Fund for $760 million. 

The exit was called a “mistake” in 2007 by Mohammed al-Shroogi, the bank’s then-managing director for the Middle East. In the intervening years, Citigroup executives have continued to visit the kingdom and expressed interest in returning to Saudi Arabia.

Implementing Saudi Arabia’s plans to restructure the economy and privatize assets -- known as Vision 2030 -- “could translate into a fantastic wallet for the investment banks,” Omar Iqtidar, Citigroup’s investment banking head in the Middle East, said in a May interview in Dubai.

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