RAWABI Vallianz Offshore Services (RVOS), an equally-owned joint venture between Rawabi Holding and Vallianz Holdings Limited, has appointed Alinma Investment Co., Saudi Fransi Capital, Saudi Hollandi Capital and GIB Capital LLC as Joint Lead Managers and Book-Runners for its first issuance of a SR1 billion Shariah - compliant sukuk. The sukuk were sold through a private placement to sophisticated investors in full and are to be used to partially finance the marine assets of RVOS over a period of five years. Rawabi Holding provides a range of products and services in the fields of oil and gas, petrochemicals, engineering and construction, power and manufacturing in the Kingdom of Saudi Arabia and the Middle East. Vallianz Holdings Limited is a provider of offshore support vessels and integrated marine solutions to the oil and gas industry.
S&P dropped a bombshell on Thursday, downgrading the sovereign credit rating for Saudi Arabia by two notches. The ratings agency also slashed credit rating for Brazil, Kazakhstan, Bahrain and Oman as the pain from low oil prices continues to undermine the economic and financial foundations of commodity exporters around the world. The decision to cut Saudi Arabia’s rating was the most striking decision though. As the world’s largest oil-producer, sitting on some of the largest reserves in the world, Saudi Arabia has been a bastion of financial stability for a long time. But it is also has a highly undiversified economy, dependent on oil for nearly all of its export earnings and budget revenues. Last October, S&P cut Saudi Arabia’s rating one level.
Saudi Arabia is reportedly easing rules on bank lending to stimulate growth in the largest Arab economy. Banks were told they can lend the equivalent of 90 percent of their deposits, up from an earlier limit of 85 percent, by the Saudi Arabian Monetary Agency on Sunday. The move followed a request from the country’s committee of treasurers to ease liquidity constraints. Saudi Arabia is seeking to revive its economy and stimulate credit as the slump in oil and government spending strain the banking system. The three-month Saudi Arabia Interbank rate rose to 1.73 percent on Feb. 3, its highest in about seven years. Bets for a devaluation of the riyal reached their highest in about two decades in January, even after the country pledged to keep its currency peg.
Minister of Islamic Affairs Saleh Al-Asheikh inaugurated Sunday the 3rd Endowment Forum in Riyadh. On the first day of the two-day event, sessions were held on endowment management systems and on endowments and their application. On Monday, sessions covered topics such as the reality of endowment in Saudi Arabia, international experiences in endowment, as well as the institutional structure of endowment. In addition to the discussion sessions, other activities included an exhibition and consultation service on endowments along with workshops on establishing endowments, modern trends in using endowment revenues, factors of successful investment, and the reality of charitable association endowments in the Kingdom.
As high as 38 percent of KSA respondents would recommend their bank as a first choice to friends or colleagues according to the first ever NPS Survey conducted in the Kingdom by Souqalmal.com. Respondents were asked to evaluate various aspects of the overall banking experience. The parameters covered customer service, product offerings and financial education, among others. The results of the survey have been used to conceptualize the inaugural Souqalmal Bank Satisfaction Index. The ripple effect of the findings will be discussed in greater detail at a FINTECH event to be held in Dubai on February 25. Souqalmal.com will also be factoring in data from the NPS Survey to award the Most Recommended Bank in KSA and UAE at the event. The nominees from KSA are National Commercial Bank, the Saudi British Bank and Alinma Bank.
Saudi Arabia's Bank Albilad plans to issue 1 to 2 billion riyals ($267-533 million) of sukuk by the end of the second quarter of 2016 to finance expansion, chief executive Khaled al-Jasser said. The bank plans to open 25 new branches and hire more employees, which Jasser said would likely increase costs this year by 15 to 17 percent. The bank will also move toward a strategy of owning rather than renting its branches, he said. Given weak market conditions, Jasser said the bank would prefer not to distribute dividends at the moment.
Alkhabeer Capital, an asset management and investment firm in Saudi Arabia, has announced the launch of Alkhabeer IPO Fund. The Alkhabeer IPO Fund is a Sharia Compliant, Open-Ended Investment Fund targeting IPOs and newly listed companies in Saudi Arabia during their first three years on the market. The fund may also invests part of its assets in the same at other GCC capital markets. Ahmed Saud Ghouth, Deputy Chief Executive Officer of Alkhabeer Capital, commented that year-on-year the firm has reported increases in assets under management and has assessed the IPO performance of securities in the GCC, which have seen improvements in the money raised over 2015.
In a new report, Fitch Ratings says Islamic finance is a mature and developed industry in Saudi Arabia, representing about two-thirds of total bank financing. About 38% comes from Islamic banks and 28% from the Islamic windows of conventional banks. Due to the largely Islamic finance nature of the lending market in Saudi Arabia, the performance and credit matrices of both Islamic and conventional banks are to a large extent similar. All banks are subject to a single supervisory authority and the same disclosure requirements. The Saudi Arabian Monetary Agency (SAMA) regulates sharia-compliant banks in the same way as it regulates conventional banks. However, one of the key differences between conventional and Islamic banks is the structure of their liquidity/investment portfolios.
The fourth-quarter results of leading Saudi banks show a number of these institutions are facing a squeeze on profits as both loans and deposits decline and asset quality deteriorates further. At the close of the fourth quarter, Saudi Hollandi Bank reported a 2.3 per cent fall in fourth-quarter net profit on higher staffing costs and provisions for bad loans. Saudi British Bank (SABB), an affiliate of HSBC Holdings, posted a 3.1 per cent drop in fourth-quarter net profit and Riyad Bank posted a 19.7 per cent fall in fourth-quarter net profit, in line with analysts’ forecasts as Samba Financial Group reported flat net profit for the fourth quarter. The notable exception was Al Rajhi Bank which reported a 28.2 per cent rise in its fourth-quarter net profit.
Saudi Arabia's Al Rajhi Bank reported a 28.2 percent rise in its fourth-quarter net profit on Thursday, beating analyst forecasts as operating income was pushed up by higher fee income from banking services and other revenue. The kingdom's second-largest lender by assets made 1.95 billion riyals ($519.6 million) in the three months to Dec. 31, up from 1.52 billion riyals in the same period a year earlier. Samba Financial Group, the kingdom's third-largest bank by assets, reported flat net profit for the fourth quarter. It concludes a mixed earnings season for banks, with as many profit falls as rises at the kingdom's major lenders as the slump in oil prices begins to take some toll. Samba made a profit of 1.23 billion riyals in the three months to Dec. 31, the same figure it reported for the corresponding period a year earlier.
Saudi Arabia plans to set up a sovereign wealth fund to manage part of its oil fortune and diversify its investments. The nation is seeking proposals from investment banks and consultants. The sovereign wealth fund is said to be focusing on businesses outside the energy industry and may be active within one to two years with an office in New York. Saudi Arabia is trying to manage declining oil prices and rising tensions among countries in the Middle East including Iran. Saudi Arabia’s net foreign assets dropped to US$640 billion (RM1.97 trillion) in October, the lowest level in three years, as the oil rout strains government finances in the biggest Arab economy.
On Oct. 30, 2015, Standard & Poor's Ratings Services lowered its unsolicited long- and short-term foreign- and local-currency sovereign credit ratings on the Kingdom of Saudi Arabia to 'A+/A-1' from 'AA-/A-1+'. The outlook remains negative. At the same time, S&P revised its transfer and convertibility (T&C) assessment on Saudi Arabia to 'AA-' from 'AA'. Standard & Poor's has converted its sovereign credit ratings on Saudi Arabia to "unsolicited" following Saudi Arabia's decision to terminate its rating agreement. A pronounced negative swing in Saudi Arabia's fiscal balance has prompted our downgrade. The kingdom has run fiscal surpluses over the 10 years to 2013 (averaging 13% of GDP).
Saudi Arabia is considering offering shares in the largest oil company in the world, Saudi Aramco, in an initial public offering (IPO) which may mean that assets of about 3.63 trillion US dollars will be accessible to citizens and investors. Saudi Aramco yesterday confirmed that it had been considering various options to provide the opportunity to a large segment of investors via an IPO in the finance market. The company said in a statement that it is studying two scenarios to present its shares for an IPO; the first is to sell an appropriate share of its assets directly, and the second is to offer a package of major projects for the IPO in several sectors, particularly the refining and chemicals sector. In addition to this, Aramco could sell about 5% of its assets which amounts to about 181.5 billion dollars in the stock market.
The Saudi insurance sector will grow by up to 17 per cent a year over the next five years thanks to regulation enforcement and growth in motor insurance, the Dubai-based investment bank Arqaam Capital said yesterday. Arquaam expects the Saudi insurance sector to be the least affected by weaker oil prices, budget cuts and the tightening liquidity as the enforcement of existing regulations will propel motor and medical premiums growth at a rate of 15-25 per cent and 14-16 per cent respectively. According to an Alpen Capital report released last year, the Saudi central bank has issued several new regulations regarding underwriting practices, reserving, actuarial-backed pricing and solvency requirements in the past two years, to help grow the industry.
The National Commercial Bank (NCB) has settled an issuance of subordinated Additional Tier 1 Capital Sukuk on Wednesday 23 December 2015, in the amount of SAR 2.7 billion through a private placement offer in Saudi Arabia. The issuance is intended to strengthen the Bank's capital base in accordance with the Basel III framework and sustain its growth while maintaining healthy capital adequacy levels. Additionally, the Sukuk will continue to extend the maturity profile of NCB's liabilities while continuing to diversify its sources of funding. The Sukuk are perpetual securities with no fixed redemption date. However, NCB has the right to call the Sukuk on a predefined date. All required approvals from the regulatory authorities have been obtained for the issuance. NCB Capital Company acted as Sole Lead Manager.
Islamic International Rating Agency (IIRA) has reaffirmed the ratings of Bank AlJazira (‘BAJ’) on the international scale at ‘A-/A2’ (SingleA Minus/A Two) and at ‘A+(sa)/A1(sa)’ (Single A Plus/A One) on the national scale. Outlook on the assigned ratings is ‘Stable’. The fiduciary score has also been reassessed in the range of ’71-75’, reflecting adequate fiduciary standards wherein rights of various stakeholders are adequately protected. The consistent growth in business volumes at BAJ, facilitated by expansion in branch network has been noted. The bank’s low net impairment ratio and sufficient liquidity held, lends support to the assigned ratings. Although financing counterparty concentration remains higher than desired levels, an improving trend has been noted. Capitalisation is adequate and above the regulatory minimum.
The Alinma Bank Board of Directors has recommended the distribution of share dividend to its shareholders for the 2015 fiscal year. After approval at the bank’s next general assembly meeting in March 2016, shareholders will receive SR0.50 per share (5% of nominal value). The total disbursal will amount to SR745 million. Alinma Bank Chairman Engr. Abdulaziz Al-Zamil congratulated the bank’s staff and shareholders on a year of growth and success.
Saudi Arabia's central bank has granted a license to its national home finance company, Bidaya and it will launch with 900 million riyals ($239.94 million) in capital. The decision by the Saudi Arabian Monetary Agency (SAMA) joins efforts to boost home ownership in the kingdom, where a shortage of affordable housing has become an economic and social issue. In development since 2010, Bidaya is a venture between the finance ministry's Public Investment Fund and the Jeddah-based Islamic Corporation for the Development of the Private Sector (ICD). The company aims to make financing more readily available in a kingdom where home ownership levels lag behind the global average of 70 percent.
Saudi Arabia has approved proposals for a 2.5% ‘white land tax’, which will apply to undeveloped residential and residential/commercial plots within urban boundaries. The law will come into force six months after the Ministry of Housing’s release of detailed regulations, the publication of which will take place within the next six months. Once implemented, proceeds from the tax will be deposited into an account of the Saudi Arabian Monetary Agency, and will be used to fund housing and related infrastructure projects in the Kingdom. The law is intended to stimulate further development to meet the demand for middle-income housing in Saudi Arabia. JLL predicts that some land owners will bring forward plans and begin development in order to avoid the additional tax burden of holding undeveloped land. Others, it suggests, will seek to sell sites to other developers, which should help to reduce land values.
Bahrain-based Arcapita has sold real estate assets it jointly held with Saudi Arabia's Al Rajhi Capital for 1.35 billion Saudi riyals ($359.81 million), the two companies said in a joint statement. The ARC Real Estate Fund, which had a lifespan of five years, acquired seven assets in logistics, warehousing and retail in Saudi Arabia and the United Arab Emirates, they said in the statement. The fund appointed an external consultant to advise on the sale in April. They did not say who they had sold the assets to. Al Rajhi Capital is the investment banking arm of Saudi Arabian lender, Al Rajhi Bank.