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Sun 19 May 2019 08:47 AM

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Citigroup to expand Saudi teams on expected MSCI trading boost

Citigroup is expanding its team in Riyadh after getting regulatory approval last month to start cash-equities trading and custody services

Citigroup to expand Saudi teams on expected MSCI trading boost
Citigroup lost a Saudi Arabian presence that dated back to 1955 when the New York-based lender sold a stake in Samba Financial Group in 2004

Citigroup plans to hire about five more bankers in Saudi Arabia as it prepares for an expected increase in foreign investment in the kingdom’s stock exchange.

The lender is expanding its team in Riyadh after getting regulatory approval last month to start cash-equities trading and custody services, chief country officer Carmen Haddad said in an interview.

MSCI’s move to include Saudi stocks in emerging-market indexes will boost trading, and Citigroup wants to be ready, she said.

“We’ve had about 14-15 people on the ground and that will grow to about 20 this year,” Haddad said. “We’re very focused on equities, custody, M&A, capital market debt and equity origination, research and advisory business. We’ll add a few traders and some middle office staff this year as a result of getting the permission to provide cash equity and custody services, and those should be operational in a few months.”

Citigroup lost a Saudi Arabian presence that dated back to 1955 when the New York-based lender sold a stake in Samba Financial Group in 2004. That left a gap for rivals such as JPMorgan Chase & Co. and HSBC Holdings Plc as the kingdom rolled out an economic transformation plan to wean itself off oil.

A companywide push to get back in paid off in 2017, when Citigroup received an investment-banking license, allowing it to advise on local initial public offerings and acquisitions.

Deal flow

Since then, the bank has won mandates on some of the biggest deals in the country. That includes the sale of a 70% stake in Saudi Basic Industries Corp. to oil giant Saudi Aramco, working as a bookrunner on Aramco’s $12 billion bond sale, and advising Zain Saudi Arabia on the $672 million sale of its mobile towers to IHS Holding.

“We’re excited by the momentum and positive deal flow,” said Haddad, declining to comment on plans to apply for a full banking licence. “We’re still looking to expand our footprint and capture investment flows.”

Still, an influx of global investment banks has weighed on fees as the likes of Goldman Sachs Group, Credit Suisse Group and Deutsche Bank look to bolster teams as the kingdom gets ready to privatise assets, raise more debt, and open up to foreign investors.

“The competitive landscape is increasing,” she said. As result, there is “heightened competition and tighter pricing, but I think the fees in Saudi Arabia are in line with international standards.”

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