Citigroup in talks over Saudi licence

Citigroup is in advanced discussions for a banking licence in Saudi Arabia, returning after a more than 10-year absence from the kingdom, as the bank looks for ways to capitalise 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 licence 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.

A spokeswoman for Citigroup declined to comment. The Capital Market Authority (CMA), which would issue the licence, said it would not comment on any application before a final decision was reached.

The licence 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 $17.5bn 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 initial public offering with the listing of Saudi Arabian Oil.

SAUDI ARABIA IS BECOMING MORE ATTRACTIVE TO FOREIGN BANKS AS IT … OVERHAULS ITS ECONOMY

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 licence 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 licence 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.

The bank opened its Saudi operations in 1955. 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 licences.

In 2004, Citigroup sold its 20% stake in Samba, formerly known as Saudi American Bank, to the state’s Public Investment Fund for $760m.

The exit was called a “mistake” in 2007 by Mohammed al-Shroogi, the bank’s then-MD for the Middle East.

In the intervening years, Citigroup executives have continued to visit the kingdom and expressed interest in returning to Saudi Arabia.